Sara joins Jason Hartman in this episode to talk about their clients’ successes in building great portfolios. They also discuss the service that the group provides and how real estate is fragmented, preserving the opportunities for small investors. Jason and Sara also chat a little bit about over-diversification, land contracts, and the shoulda coulda woulda mentality.
Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Announcer 0:13
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer, and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in 1000s of real estate transactions, this program will help you follow in Jason’s footsteps on the road to your financial independence day, you really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:04
Welcome to the creating wealth show, this is your host, Jason Hartman, with you for Episode 559 559, thank you so much for joining us today. And I’ve got Sarah here with me. You’ve heard her on the show many times before. And we thought today that for part of the show, we would, instead of doing a little talking behind your back, we would talk to you directly because we’re always talking about you because we care and we love you. And that’s our clients and listeners too, of course, but mostly clients because we’re more engaged with clients than listeners, because we’re talking to clients constantly. So we thought we’d just, you know, go through some kind of like common issues, questions, goals that clients have when they’re building a real estate portfolio, and creating passive income or eyes, I always like to make the disclaimer, semi passive income, you know, me, I don’t believe in passive investments, I don’t think they exist. Now, don’t get me wrong, I believe I would believe in them. If they existed, I just don’t think they actually exist, I guess you would say, I’m a passive investment atheist, I’m a non believer, because I think you got to pay attention to everything out there. If you know anything, you put your money into even the bank, ask the Cypriots, you know, that’s what they call them, those people in Cyprus that had all this money in the bank that lost a bunch of it during what they call the haircut. So that’s a very important thing. And that’s what’s going on out there no such thing as a passive investment even in the bank. And Sarah, what do you say to that? Do you agree?
Sara 2:38
Oh, I definitely agree. We’ve got some great ones. But you know, each of them have their little intricate problems, and some are good at, you know, some things and others are good at other things. And it’s nobody’s perfect. So I guess that’s just life, though, right?
Jason Hartman 2:52
Yes, everything requires attention and management. But income property doesn’t require terribly much intention in management. And as we’re going to see, today’s we’re talking about some of our clients, instead of talking behind your back, and we’re talking about you on the show, don’t worry, we won’t identify you directly. So don’t worry about that. You can still maintain your anonymity. But as we’re talking about that, you know, the most common goal, Sarah, of investors, when they come to you now, you know, generically, everybody would say, Well, I want to make a profit, or I want to make money, or I want to get a high return on my investment. But really, the goal is the freedom. I mean, people just they’ve got their good corporate jobs, they’ve got their business, and it generates a good living. But again, it requires a massive amount of attention, right?
Sara 3:45
Yeah, absolutely. And, you know, what I’m really noticing with our clients is that they’re really attacking these big portfolios of properties. I mean, the guidelines, you know, the Fannie Freddie guidelines have loosened up a little bit. But now we’re seeing these big portfolio lenders come in, as you’ve heard us talk about, and allow investors to go beyond that those, you know, 10 properties is what they’ve been waiting for.
Jason Hartman 4:11
Yeah. So what Sarah’s talking about is, of course, those agency loans, where the government makes the secondary market with Fannie Mae and Freddie Mac, and the 10 loan per person limit. So, you know, single person 10 loans, married couple potentially 20 loans, 10 loans each if they can both qualify separately for the properties. But now, I mean, and this, this is why I had this idea for an episode is that I was, you know, I was going through and looking at some of the accounting, and I just see all of these clients just repeat, repeat, repeat. And it’s the same people that are just buying and building some pretty decent sized portfolios. Congratulations to all of you listening. I mean, you know, there’s so many names I couldn’t even mention but bill, Jesse, gosh, there’s just a lot Have them and we’ll, we’ll kind of dive down on some of them. I mean, you’re just you’re just building some nice nest eggs for yourself. Wow. I mean, I applaud you. Yay. Clapping, we should have some sound effects like a clapping that would be really cool. If we were if we were actually professional, we would have some audience applause noise you know? I have it in my house, actually, you know, when I walk around and do things, it claps for me. I’m joking, of course.
Sara 5:27
Well, I finally got my emoji apps. My 12 year old daughter finally downloaded that emoji app. Do you know what that is? With a thumbs up and a happy face?
Jason Hartman 5:36
No, no, no, you you don’t even need emoji anymore. It’s built into your iPhone. And it’s on Facebook. Right? You don’t even need an app.
Sara 5:43
Well, you need it on your keyboard. Yeah,
Jason Hartman 5:44
She’s probably got this super super emoji app. Yeah.
Sara 5:48
Yeah, we need the emojis that clap and make noise.
Jason Hartman 5:51
Okay, so listeners, here’s your emoji. You’ve got a big smiley face. And a big thank you. I don’t think there’s an emoji for Thank you. And then a big applause because really, I mean, you know, as I’m seeing the closings here, and and looking at who’s buying the property, and you’re, you’re building some good sized portfolio. So congratulations, Sarah, talk in front of their back a little bit and not behind their back. So tell us about some of these clients and what’s going on, you know, recently here, recent purchases, closings, whatever.
Sara 6:24
Yeah. So my most recent communication was last week, I got an email from a client. And he said, I finally took the plunge and fired my boss. And you know, he’s got a home based business that, you know, kind of blew up for him. And he’s been using a lot of that capital to now invest in properties. And you know, he started with one or two, and it kind of snowballed. And so now he’s really diving in and investing with his family. And that’s Russ. So congrats to Russ.
Jason Hartman 6:50
Yeah, Russ. I’m seeing your name a lot here. So congratulations. Good job. Good job.
Sara 6:55
Yeah. And we’re I’m trying to get Ross to come join us on the podcast, but he’s just so busy with all of this right now. So
Jason Hartman 7:01
we’ll wait Ross Ross, you said Ross.
Sara 7:04
I said, Russ.
Jason Hartman 7:06
Oh, sorry. I thought you said Ross. Well, I’m thinking of my friend Ross. That actually owes me a phone call. So maybe I did that with my mind playing tricks on me there. But I don’t know. Listeners. What did she say? Did she shoot herself in the shoe? See, see, Sarah. That’s how we know how long people have been listening. Because only the secret group of longtime listeners get that reference of shooting yourself in the shoe.
Sara 7:34
Yeah, I can’t wait till we all just forget about that.
Jason Hartman 7:39
Okay, I’m gonna bring the rest of you up to speed here for just a quick second. Sarah has this funny, charming way of taking famous old sayings and tweaking them a little bit? Not intentionally, just by accident. They come out so funny. On one episode, she goes, she goes, I don’t want clients to shoot themselves in the shoe. And I said, Sarah, it’s shoot yourself in the foot. That’s the same. And so anyway, that was, you know, a bunch of listeners emailed us and saying, oh, haha, Sarah, don’t shoot yourself in the shoe. And I thought it was a female thing, because you’re always thinking about cool shoes and stuff. But I don’t know.
Sara 8:26
All right. All right. Back to the show.
Jason Hartman 8:30
You got any more funny things for us there?
Sara 8:32
I don’t, but I’m sure you’ll catch me in one pretty soon here.
Jason Hartman 8:37
And by the way, if you’re tuning in for the first time, just so you know, we usually don’t have all this fluff and silliness. Sara and I are just kind of a little fried here. It’s toward the end of the day when we’re recording this. And it has been insanely busy lately. So I think I think Sarah, maybe we’re getting a little punchy. Usually the episodes are quite on target on topic and a little serious. This one’s almost like a morning show where people are just kind of giggling and being kind of silly. But anyway, so Kathy has been buying a lot of properties lately. Yeah. Kathy from California. Hi, Kathy.
Sara 9:09
Hi, Kathy. And she just registered for our Jason Hartman University live event in San Diego by the time our listeners hear this, I’m sure
Jason Hartman 9:18
it’ll be right before him.
Sara 9:20
Yeah, they can still come. Yeah. So that’s going to be an awesome event. So she’ll be there. And then let’s see, we’ve got Jesse who just closed on a portfolio of about nine properties. I believe it was in Memphis, so congratulations to Jesse.
Jason Hartman 9:37
Yay, Jesse. So just in jet, but Jesse was buying stuff before that. I mean, Jesse has been building quite a portfolio right?
Sara 9:44
She is and she’s starting to you know, she’s been investing with us for a while. And so she started to get into that over diversification of markets. And so now I think she’s kind of consolidating a little bit. You know, she’s really diving into having to manage her managers and So she’s wanting to not downsize her portfolio but just downsize in terms of location.
Jason Hartman 10:05
Yeah. And then then that, by the way is, you know, a problem that I had myself and, and, you know, one of the mistakes I made in building my portfolio is that I over diversified, you know, one of my commandments is thou shalt diversify. And I totally agree with that. But what that means is three to five markets. Okay, not 10 markets, okay, not 12 markets, that’s just too many, it’s too many different people to deal with and, you know, cities to understand. So, you know, consolidating to three to five markets is a great choice. I firmly agree with that. But you don’t want to be in one or two, you want to be in at least three?
Sara 10:46
Well, and I want to just touch on that. And it kind of explain how that happens. So, you know, a lot of times the listener will call in and they’ll say, Oh, you know, I want to invest and, you know, I want to buy a couple of properties and get my feet wet.
Jason Hartman 11:00
Sara, you got that saying, right, that is the same. What were you gonna say, I want to get my head wet. I want to dip my legs in the water.
Sara 11:12
We’re having a heatwave here in So Cal, it’s like 100 degrees today. So I’m super hot. I’ve had a headache all day. So yes, I would love to just dive into any pool of water right now.
Jason Hartman 11:21
You’d like to do more than get your feet wet then, right.
Sara 11:24
Yes, I would, I would.
Sara 11:27
But But what I was gonna say is so and so listener will call in and they’ll say, okay, want to invest? And I’ll ask them well, you know, how much money would you like to invest in? What is your time horizon for getting started, you know, give me an idea of your six month goal and your, you know, five year plan. And a lot of them won’t open up to me at first, just because, you know, it’s a new relationship. They don’t know us, they’re getting to know us. And so they’ll start with one or two, and then, you know, they’ll start to get comfortable. And they’ll go into another market without ever, you know, verbalizing their goal to me. And so now I’m working a little bit harder on getting clients to open up and they really are, so that I can advise them, you know, look, if you’re gonna buy 20 properties, I’m not going to do two here and two here and two here, you know, let’s really come up with a better plan, you know, to simplify this for you. And so that’s that’s kind of I think, maybe what happened with Jesse was I don’t think she knew she was gonna buy all these properties. At first, you kind of got started and you know,
Jason Hartman 12:27
Well, I yeah, I absolutely must say that this becomes addictive. You know, usually when we talk about addictions, that is not a good thing, right. But there are a few good addictions, collecting income properties is a very nice addiction. Exercising is a good addiction, listening to Jason Hartman podcast is a great addiction, that’s like the best one you can have. Okay, so. But yeah, you know, it really does, you know, once you get going with this stuff, it’s like you want to buy the whole world, I remember when I looked at that map, of where I owned properties, and where my little mini real estate Empire was all over the country. And again, I was over diversified. But I tell you, it was certainly cool to just, you know, see that, that the point is, though, if you’re in three to five markets, now you want to start doubling down. because number one, one of the great things is you have some feedback on that market, you know, what the market is, like, you know, what the local market specialist is, like, you know, how well, you like their operation and get along with them, and like the way they do things. And so in those strong places, double down and get more properties. So you’re in, you know, ideally, no more than five markets.
Sara 13:45
Yeah, I totally agree. And actually, you know, one of the ways I’m advising clients is, you know, look, if you’re planning to do this, you know, big portfolio within two years, focus on one or two markets at a time, and do all your properties there first, you know, I don’t want to say one, I, you know, but probably start with two markets and acquire in those two markets, because what happens, and I think kind of what happened with Jesse and a lot of our clients is a new market will come up, and they’ll get really excited about that. And so they’ll, they’ll jump into that market. And then, you know, maybe a year goes by, and they haven’t doubled down yet. And all of a sudden, you know, a year or two years, that market doesn’t make sense anymore. Like some of those markets can change quickly.
Jason Hartman 14:27
Right. They get in other words, they get frothy, just so that was sort of what we’re saying when it doesn’t make sense anymore, is that they the market gets a little frothy, and it becomes more of a hybrid market than linear market. And the rents, you know, they escalate much more slowly than the prices do. So you get in that situation where that cash flow that you got when you started in that market. You just can’t achieve it anymore. You can’t get those kind of numbers anymore. So very important thing. Yeah,
Sara 14:55
Yeah. So you know, in other words, maybe they waited too long to double down. In the meantime, they had, you know, opened up, you know, two or three other markets. And so that now they have, you know, to hear to their, you know, their, they’ve got two and four markets, and maybe they can’t, you know, move on in that market because it’s changed. And so, you know, if, you know, you’re wanting to deploy a certain amount of capital, you know, just communicate that to us, so we can help you, you know, structure these portfolios. And, you know, Jason, as you said to me, the other day, I have this kind of algorithm I use in recommending markets and market specialists. And I know, you know, where the inventory is hot, you know, we’re, we’re getting a lot of Prop properties, you know, where, you know, maybe the management is, is better than other markets, where we’re getting the best communication. And there’s like, all these things that play into us recommending markets, I mean, of course, numbers, and, you know, location is the most important thing, but, you know, there’s so much more to it in terms of the teams and communication with our market specialists.
Jason Hartman 16:01
So this deserves a pause, because this deserves some real attention for a moment. Okay, Sarah, look, I have said many times, we would rather recommend a B market within a team than an a market with a B team any day, because the characteristics of the market, then, you know, look at that as definitely important. There’s no question about it. But more important than that are the characteristics of the team with which you’ll be working. And I can tell you that we’ve had this happen to us. And Sarah, I’m not going to mention the name. But you’ll remember one client who lives in Orange County, who we both know, this client had purchased several properties from us. And then in one of the areas where we really didn’t have a good local market specialist at the time, because, you know, we’re, we’re area agnostic, and we’re local market specialist agnostic to if, if a team is working well for us in the beginning, and then they start to get, you know, look, I’ll give you an old Napoleon quote, it’s a great quote, by the way, and here it goes, you want to write this one down, listeners, it’s a good one, here we go. I’ll repeat it twice. Napoleon said, the most dangerous moment comes with victory, the most dangerous moment comes with victory. And he said that, because the human nature is we always get complacent, maybe we get cocky, maybe we get, you know, too confident or entitled. And that’s what happens with some local market specialists, we will refer a bunch of business to them, they make a bunch of money, and then they become complacent, and they’re just not as good as they used to be, you know, they kind of take the relationship for granted. And we don’t want that. And so we’ll we’ll stop recommending as much business or if they’re really bad, we’ll fire them, which, you know, we’ve only had to do, you know, a handful of times over the years. So this particular client that I’m talking about, you know, started buying some properties on his own in this in this market that I’m referring to, and it didn’t go so well, because they have no leverage, you know, on a one off deal. Or, you know, if you go and you find someone yourself, and you buy three properties from them, I mean, they’re not going to treat that relationship as any big deal. We bring, we aggregate through through quantity to that local market specialist, so we can really get their attention and get some good service from them, and some good deals for our clients. So talk a little bit Sarah, about some of those issues. Of course, the market the numbers, does the market makes sense? Is that a good place? Is there in migration, job growth, you know, good rent to value ratios, all these other factors? What’s the age of the inventory? What’s the rental market? Like? There’s some like a zillion little factors, okay. But the, I want to call them the soft factors, okay. The things I just mentioned, were the hard factors, okay, the the sort of more data driven empirical things, but the the soft factors, like personalities, like, you know, if we have a client that’s really, you know, high strung, and a local market specialist who does a good job, but they’re kind of laid back, or vice versa, maybe the local market specialist is really hard or high strung, and the client is really laid back. Or, you know, that’s just an example I can think of off the top of my head. I mean, what what do you do when placing that local market specialist in that client, you know, deciding who to introduce to who, and especially in markets where we like the market, but maybe we have three different local market specialists in there that we can choose from? which one does the client get and why talk about that a little bit?
Sara 19:53
Well, so first of all, I’ve mentioned before, I’m an investment therapist, right which by the way, let’s give a shout out to Gabe. Right,
Jason Hartman 20:03
Gabriel. Thank you, that was so cool.
Sara 20:06
He sent a shirt that said investment therapist, and that was awesome. So we love that.
Jason Hartman 20:11
That was awesome. Thank you, Gabe.
Sara 20:14
But just recently, I’m also realizing I’m a matchmaker, right? So I’m a matchmaker between the investor and the local market specialist. And and you were right on point when you said, you know, look, if you have somebody that is high touch, meaning, you know, they, they need constant communication, they’re detail oriented, you got to make sure to put them in touch with the person who can deliver on that. And more often than not, not everybody can deliver on that, it seems like a simple thing to you know, return a call and return emails quickly and send photos, but, you know, some are better at it than others. And so, you know, we were definitely partnering up, you know, the investors with the right fit for their communication style.
Jason Hartman 21:03
and someone listening who hasn’t invested with us, or hasn’t invested at all might be thinking, you know, they work at a corporate job. And it’s a well run company, and things get done, and people communicate. But in this world, this is a world of mom and pop businesses. It’s very fragmented. Real Estate school is super easy to pass. Unfortunately, I think it should be a lot harder. But you know, look at one of the hardest tests in the country, for example, actually, now that we’re talking about that the bar exam, okay, the bar exam, and then the series seven securities license to sell stocks and bonds, right? I mean, those tests are much harder than the real estate exam. And there’s a lot of idiots doing that stuff, too. Okay. So everything is fragmented, really, you know, it’s, it’s not like you’re working with IBM, okay. You know, it’s just, it’s just not like that anymore. In today’s world, so. So yeah, I agree. You know, you got to embrace the fragmentation. That’s what keeps Goldman Sachs out of our business, because they don’t want to deal with these little mom and pops. And they can’t work their way around that. But it, it preserves the opportunity for the small investor, which is a wonderful thing.
Sara 22:22
Yeah. So I agree. And our clients are doing great. They, you know, because of all the teachings you do on your podcast, you know, they’re really learning how to manage their managers. And, you know, we have a few clients that are starting to self manage their properties. But, you know, for somebody that works a full time job and doesn’t have a lot of time on their hands, we certainly take a lot of the guesswork out of it for them. And, you know, this can be done alongside your, you know, full time job or your full time soccer mom program. I happen to you know, have both So, you know, it can certainly be done.
Jason Hartman 23:01
Okay, so any other clients you want to mention and kind of like what they’re doing. You know, Toby, Mark, you there’s just so many Tina, I mean, I’m looking at your list here, Chris, Kevin, I mean, last just just last month, by the way, Sarah, you did I think what 47 transactions, is that correct?
Sara 23:21
Um, I don’t know. Maybe? Yeah. Last month was busy. Last month was busy. Yeah. So you mentioned Toby from Hawaii. And she’s another client that we started working with years ago. And she, you know, she sent me an email, I don’t know, a few months back and, and she had kind of a challenging year, about a year ago, I would say, last year, and the year before, she had some vacant units. And so we were communicating on that. And then a few months ago, she said, You’re not going to believe it. All my units are leased. And so that was really exciting. And so then, you know, she started acquiring again, and she we actually talked yesterday or the day before, and she says, Wow, when I close this next, you know, portfolio, I’m going to have 19 properties.
Jason Hartman 24:06
Fantastic. Congratulations, Toby. That’s awesome. 19 properties. Good.
Sara 24:11
So congrats. And she, she is busy. She She works full time. She’s a mom. She is always I think anytime she and I talked to each other, we’re both in the car. You know, so she’s super busy, but she’s made the time to, to acquire a pretty good portfolio.
Jason Hartman 24:30
Good stuff, good stuff, you know, Anoop and Carlos and, boy, there’s just Damon. I mean, you know, Steve, of course, Rich. I I just wish I could say full names. So it would, you know, be easier to communicate about it but but you know, there’s just a lot of people who I just see these repeat names over and over again, that are just stocking up on property. Wow. Um, I’m getting a little envious of our own clients here. Like I need to be buying more stuff.
Sara 24:59
You should. I can help you find some properties if you like.
Jason Hartman 25:02
I bet you can. But you know me. What a difficult client I am sorry, you wouldn’t want me.
Sara 25:06
Yeah, you’re pretty difficult.
Jason Hartman 25:10
No, I’m not. I’m easy.
Sara 25:12
I gotta put our top-notch market specialist. Yeah. How about one more shout out? How about Andy and Stacy. They’re from the southern California area. And they’re young. They’re a young couple. I want to say early 30s, late 20s. Maybe? I think they’re younger than me. I don’t know. Anyways, they just closed on about five properties. I think all in Memphis, too. And that was their second shot. I mean, they were acquiring properties about a year and a half ago. They’ve been out to our meet the masters and they’re doing great. I love to see the the young, young kids. You know, doing this at an early age is awesome.
Jason Hartman 25:57
Yeah, that really is good. You know, wherever you are. Most people have that same thing, you know, that reluctant investors lament that I many times share, and I’ll try to be sure to share that again in San Diego. But you know, I hesitate to make a list of all the deals I’ve missed. And that type of mentality that should have coulda woulda, and that you don’t look at the only moment any of us have control of ever is now and it’s gone. And now and it’s gone. And so if you haven’t started, or if you haven’t done much yet, in terms of building your, your income property portfolio, just keep going just buy some more properties. And start today, wherever you are, is where you have to start. You can’t start 10 years ago, it just doesn’t happen. So you got to start today, and just grow your portfolio from there. So absolutely Good. Good stuff. So any other clients you want to mention? I just think people love to hear their clients stories, if you you know, have any unique parts of them.
Sara 26:59
Uhm, you mentioned I think you mentioned like the whole list. I don’t know. I mean, Damon,
Jason Hartman 27:05
Tell us about Damon
Sara 27:07
Damon, he’s been a client for a while as well. I mean, he he just got started with the land contracts as well as Bill.
Jason Hartman 27:15
Bill’s been doing a lot of land contracts, by the way. And by the way, just explain that to the listeners. Again, we ran that as a flashback Friday recently. And we also ran that episode. And I think, January or December originally. I know it was sort of a quick turnaround for flashback Friday, but that local market specialist will be at our San Diego event. So we wanted to refresh your memory on the land contracts. He presented at our Meet the Masters event last January. And you know, people are buying paper through our network, not just properties. They’re buying the paper on the properties too. Right?
Sara 27:51
Yeah. And I think that’s a good fit for people who want to use some of their IRA funds to invest. I think, you know, that’s a good source. And then we’ve got, you mentioned Rich, he’s on the East Coast. Rich is my buddy. He’s like one of our nicest clients, and all of our clients are awesome. They’re all nice, but rich, like every time we email, he’s like, oh, thank you so much. And it makes my day he’s like, so gracious. You know, for our help. And it’s funny, cuz he’s like, the nicest guy, right? But then he told me the other day, he’s like, man, I really don’t trust anybody.
Sara 28:30
You know, but he’s doing really good, too. He’s, he’s got a nice little portfolio. And yeah, he’s been great. So
Jason Hartman 28:39
Good to hear. Good to hear. I think I think you’re gonna get some people mad at you that you singled him out as the nicest. Now everybody’s gonna try and win the nicest award.
Sara 28:47
I like flowers, Starbucks.
Jason Hartman 28:51
Oh, shut up. You should be sending them flowers and Starbucks. Don’t say that.
Sara 28:55
I’m just kidding. I’m just kidding. He doesn’t send me any gifts. I promise.
Jason Hartman 29:00
Sarah, don’t shoot yourself in the shoe.
Sara 29:02
I won’t, I won’t.
Jason Hartman 29:05
Yeah, and in the past, you know, over the years, and many of them have been on the show. So we kind of tried to mention some clients that haven’t been on the show. And of course, if you’re listening to this, and you’d like to be on or you’ve been on before, we’d love to have you. We love hearing your story and your case studies. I think it’s super valuable to our other clients. You know, whether it be Philip or David or any of the people we’ve had so many over the years that have come on the show. You know, Neil is always participating in the monthly member calls. So I’m very grateful for that. You know, it’s just always nice to have clients on the show. And we really, really appreciate that.
Sara 29:46
Yes. And please come out to our events. If we haven’t met you in person. I love meeting our clients in person. I mean, it just it just I don’t know it’s when when you’re working with somebody and you’ve met them. It’s just a different feel like I can’t explain it. But I love meeting our clients in person. And I hope to see several of them at our upcoming event here. Again, I’m sure there will still be a few seats left by the time you hear this.
Jason Hartman 30:13
Yeah, we’re recording this episode a little bit early, by the way, so we’re kind of ahead in our production. But yeah, our San Diego event is coming up fast. Okay, and join us for that, go to Jason hartman.com. And register. That’s Jason Hartman University Live is the name of the event JHU Live, just on the Jason hartman.com website, you can register in the events section, we’d love to see you there. We’ve also got our venture Alliance event little just just slightly over a month away. Newport, Rhode Island, that is just going to be fantastic. I’ve been working with all over one of our investment counselors who’s helping out plan that event. And boy, that’s just going to be phenomenal. I can hardly wait, what a fantastic event, we’ve got a great speaker that is 98% confirmed coming to that event. And he lives in New York City, and will be coming up to Newport Rhode Island to present the ins and outs of the hard money and private lending business. You know, many of our clients do do that as well. And then you can buy the paper, buy the notes at a discount the land contracts, we’ll be presenting that at the San Diego event. So just a lot of good stuff. And we really just appreciate our clients so much. And we’re having a banner year, I mean, business is nothing short of phenomenal. So we thank you all so much for your business and your continued support. We offer lifetime rental coordination to help you with your properties. If you have a problem, years in the future, from from when you bought the property, just let us know. We’re always happy to help you just continue to earn your business. So thank you very much for that. And Sarah, any other thoughts? In closing? Let’s wrap this up.
Sara 31:56
No, I mean, we covered a lot. Thank you so much for having me on the show. And until next time.
Jason Hartman 32:02
Yep. We’ll see as many of you as possible at the event. One more thing I’ll just say about our live events. Come out and meet us come out and meet our clients. So many of our clients repeat these events. And they come over and over again. Now this event. JHU live is a totally new event. So that really will be different than our creating wealth boot camp than our meet the Masters that our property tours, it’s different than that. So that’s a new event. Okay, so we got something new going on, which is exciting. But you get to meet our clients and talk to them, and hear about their experiences and learn from them and then also learn from us. So just make it a point to come see us in person live somewhere in the country, maybe once a year, I think that that would be a really good goal to do that once a year. So we’re always sort of in touch with you and can see you in person. Okay, so thanks so much, Jason hartman.com is the website and also for a discount on the San Diego event. Just write a review on iTunes, and send a screenshot to reviews at Jason hartman.com. That’s reviews with an S it’s plural reviews at Jason hartman.com. Send me that screenshot of your review, and I will send you back a promo code for a 30% discount. We’ll look forward to seeing you there. Or maybe even at our venture Alliance event. At the end of September. Happy investing everyone and thanks for listening.
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I’ve never really thought of Jason as subversive, but I just found out that’s what Wall Street considers him to be
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Really now How is that possible at all?
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Simple. Wall Street believes that real estate investors are dangerous to their schemes? Because the dirty truth about income property is that it actually works in real life.
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I know I mean, how many people do you know not including insiders who created wealth with stocks, bonds and mutual funds. those options are for people who only want to pretend they’re getting ahead.
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Stocks and other non direct traded assets are a losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades.
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Yep. And that’s why Jason offers a one book set on creating wealth that comes with 20 digital download audios. He shows us how we can be excited about these scary times. And to exploit the incredible opportunities this present economy has afforded us.
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This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email media at Hartman media.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own. And the host is acting on behalf of Platinum properties, investor network, Inc, exclusively.
In this episode, Jason Hartman and Naresh talk about the impact of technology on inflation and the rate of change in inflation rates. Then, Jason explains how deflation affects the real estate market and reiterates that cash flow allows you to weather the downmarket storm. Increasing your knowledge and learning pertinent facts and figures will help you anticipate upcoming market changes.
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This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
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Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in 1000s of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:04
Welcome to the creating wealth show. This is your host, Jason Hartman. We are at episode number 557 557. Thank you so much for joining me today as we talk about several issues with my temporary co host and that is Mr. Naresh. He’s back on the show for is this the second time Naresh.
Naresh 1:21
This is the second time this month, Jason. It’s a pleasure to be back on looking forward to some good discussion, discussion.
Jason Hartman 1:26
Are you on the show a long time ago? I think you were, right?
Naresh 1:29
I was on about two years ago. And I remember that show very well, because we had an inflation deflation debate. And I told you some things that surprised you. I told you that I was a huge Bernanke key fan. This is one Bernanke he was leaving the Fed. I think he was leaving, like within the next two weeks that we ran that interview. And I also told you that deflation was coming. And you gave me some some heat for that. But that was about two years ago.
Jason Hartman 1:55
Well, so the question is, who is right now that we look back? I mean, I don’t know. I almost want to say I’m wrong. But I’m not because we’ve had a little bit of inflation. But man, it’s been so mild, that, you know, I hope I’m not like totally wrong on this prediction about inflation, because I was a pretty much an inflation bug A few years ago, and it boggles my mind, that they’ve been able to just, I mean, I know it’s baked into the cake, we know the inflation is baked into the cake. I mean, you’re you’re well, at least you were a bit of a gold bug. We’re gonna talk about that today. So we can we can address that one in a moment. But, you know, it’s it’s definitely from a monetary and fiscal perspective baked into the cake. The only thing that could overshadow that could be the, I’m gonna say, the trump card, because we’re gonna talk about Trump today is technology, as I’ve talked about many times, that’s the one that’s really hard to understand, you know, how big that impact of all of this incredible technology and this progress that were on the verge of what that impact will be. But, you know, I mean, we haven’t really had real deflation, right? I mean, I mean, you’re not gonna try and like collect on our bet, are you?
Naresh 3:13
Well, we didn’t, we didn’t, we didn’t make a bet. But if you look at the inflation rate, so we spoke in probably late 2013, early 2014, and I’ll give you some data, January 2014, or we’ll take December 2013, the inflation rate was at 1.5%. So not, no major inflation. Compare that to when we actually saw major, not major, but we saw some inflation in 2011. After it appeared, we came out of the recession, we saw the effects of the bailouts and the stimulus packages in 2011, the inflation rate hit almost 4%, September 2011.
Jason Hartman 3:50
Okay, but but we do i do have to interrupt here, of course, and our vast majority of our listeners know, but in case you are new tuning into this show, those official stats are always understated, even in this environment. So I would say and, you know, feel free to disagree with me on this, Naresh. But I would say that you you have to assume that the real inflation rate is 50% higher than the official number. So they tell you, it’s 4% it’s really six. If they tell you it’s two, it’s really three. Okay, that’s what I’m saying.
Naresh 4:24
Yeah, I’m not gonna argue with how the numbers are calculated, and said on a percentage basis. If you just look at the improvement, or you know the the decrease in inflation, that’s kind of what I look look at rather than the actual number itself. So same thing with unemployment, of course, the government calculates it their own way. And then you probably have john Williams on your show who runs shadow stats calculated, we have his own way. What I look at is I’m more interested in the I guess the chart rather than the actual number itself, right.
Jason Hartman 4:57
You’re looking at you’re looking at the the change the rate of Change
Naresh 5:01
Exactly the rate of change.
Jason Hartman 5:02
Okay, so So tell the listeners why. And you know, of course, this is massively important to real estate investors, you know which way this goes. And I’ve shared my scenarios and my plans. And you know, with income property being a multi dimensional asset class, the beautiful thing is you can adjust your strategy, regardless of the environment, inflation being the home run, the best thing, especially a lot of inflation being the home run for real estate investors, deflation being something that you’re, you know, By comparison, you’re going to do probably better than most everybody else. But again, it’s not gonna be a home run in stagnation, we’re just kind of nothing happens, then you’ll you’ll be better off than everybody else. But again, certainly not a home run like the the inflationary environment is the home run.
Naresh 5:50
Well, it that we had our little debate back in, I think, December 2013. Now, fast forward, today, I gave you the number back then it was at 1.5%, the inflation rate,
Jason Hartman 6:02
Maybe this needs to be a flashback Friday show. We’ll have the audience vote. Who won.
Naresh 6:09
Yeah. And now fast forward, the latest number that the government put out for June of this year 2015, the inflation rate is almost at zero that the official number is at point 1%. Most of 2015 has been in negative territory. So there’s actually been a good amount of deflation in 2015. And the latest projections for the July number. There. They’re saying that July was the most deflationary month that the United States has has faced since 2009. So we’ll see what that number ends up being. But I think deflation is is the worry right now, not just in the United States, but globally. That’s why China is doing all sorts of stimulation into its economy. Greece got another bailout. And all this could end up or it will end up, in my opinion, delaying when the Federal Reserve raises its interest rates. I think they were supposed to do it in September. Now it looks looking like that’s going to be delayed because of this deflationary pressure. So I’m curious, Jason, what are your thoughts on this? And what does this mean, for real estate moving forward?
Jason Hartman 7:26
Yeah. So first of all, interestingly, and I just read this this morning, believe it or not, Greece, the Greek economy actually grew in the last quarter. I mean, it’s amazing, right? You know, you look at what’s going on, and you think, you know, how can the economy possibly be growing in Greece, it actually did grow slightly. So that’s incredible. But my thoughts are, like I said, it’s baked into the cake from a fiscal and monetary perspective, the fact that we haven’t had more inflation. It kind of amazes me and the fact that we still are the reserve currency of the world amazes me, but at least I understand why that is true. And it’s because we have the biggest economy, the biggest military, and a lot of weight to throw around in the world and, you know, forcing other other countries to take our dollars and keep it as the reserve currency. But in terms of real estate, you know, in a deflationary environment, the whole game is about yield, or a stagnation environment, either one, or stagflation, I should say, it’s all about yield. So then the income property asset becomes a cash flow type of asset, a cash on cash return asset. And if you look on the performers at Jason hartman.com, in the Properties section, just pick any property in there, and you’re likely to see cash on cash returns projected anywhere from you know, in this, I’m just kind of guesstimating here what they are, because I’m not looking at it, but anywhere from maybe eight to 12% annually as a cash on cash return, maybe even 14% annually on some of those performance. But if you see that, you know, that just shows you Naresh as long as you maintain the same income and expense ratio on a property. Even if the property goes down in value, even if the value is cut in half, you still have the yield. And in that environment, remember, economics is a relative game. It’s it’s not that you need to make you know 100% annually, you just need to do better than everybody else because the the marketplace and the entire economy although there is a lag time and by the way, the lag time concept is what kills people. Okay, everything ultimately adjusts. It just takes time for it to play out. And the people that get killed are the people who don’t in real estate have staying power, or in any other investments have staying power. And it reminds me of that sort of famous old quote, you know, where the stock market investor complains, well, the market is irrational, I’m right. And someone says to him, well, I have news for you, the market can remain irrational a lot longer than you can remain solvent. And so, so so that’s the key. So for the real estate investor, if you can maintain somewhere close to that income and expense ratio on your property, regardless if the value is going up or down. Now, I mean, it’s hard to argue, I mean, it’s pretty much impossible to argue that real estate has been deflating, because it’s been inflating a lot over the past few years. So there’s definitely inflation there. But real estate prices aren’t directly in the consumer price index, I believe it’s called This is from memory, the rental equivalent value or something like that. And they have this equation for working out how much housing expense influences the CPI. But now you might be thinking, well, Jason, now this is a good question. Okay. Well, Jason, if we do have a lot of deflation, and say that deflation affects real estate prices, which, by the way, the trend has been the complete opposite the last several years, coming out of the Great Recession, there’s been quite a bit of real estate inflation, especially in the cyclical markets that I believe are in a bubble. They’re in bubble territory, I believe. And those will adjust to maybe they’ve overstepped. So you know, what happens? Well, if the values go down, won’t the rents go down? And the answer to that question is may be, here’s why. You got to really dice this up. Remember, when I talk about creating wealth seminars, I talk about my three dimensions of real estate. And there are really more than three dimensions. But that just sounds good. So I call it the three dimensions. Two of those dimensions are rent, in other words, what you can rent the property for, and another dimension being the value of the property. So if values decline, all the renters out there think, Well, I’m not going to buy because the markets declining. And this is the way markets act in stocks and precious metals and real estate. This is just the nature of markets in general, where the little guy always gets in or out too late. If we were looking at a chart right now, and you like looking at charts Naresh. And you see, you know, you see the chart go up and you see it go down, you know, the little guy never buys in the trough, and never sells at the peak, it just does not happen. That’s not the way markets act, because there’s this lag time of media. So the there the little guy is all bathed in the stew of media out there. And they’re reading articles, oh, Real Estate’s going through the roof. It’s the best market in years. And you know, they got to get bathed in that for a while before they react. Okay. And by the time they react, you know, you’re, you’re approaching a bubble. That’s typically how it works. So the little guy always acts way too late. Okay, that’s just the nature of the beast, it happens in pretty much every market. And every cycle, you can see it over and over, it just always repeats itself. And similarly the thing, same thing happens on a downturn, you know, as, as the price of whatever it is widgets, houses, stocks, precious metals is going down. The little guy always says, Well, you know, I’m gonna hold on a little longer, see if it comes back up. And then you know, they usually end up getting discouraged at the, you know, at the trough near the bottom, and then they sell and they lose money. Okay, so this is what happens. And this is why you need to practice what I call sustainable investing. Because if you have cash flow, then you can weather the storm you’re never forced to sell at an inopportune time. And similarly, stay married. Because if you are married, and I’m not, but I’m looking, and I know you’re looking too, right Naresh?
Naresh 14:17
I don’t know about marriage. I don’t know about marriage. That’s for that’s very different show. So.
Jason Hartman 14:22
Okay, okay. Well, you seem to be pretty motivated. You know, when you talk about your dating life, so, but what was I talking about? Now? We got off on a tangent. Oh, yeah. Do not get divorced in a down market. That’s my lesson. because it forces you to liquidate assets at the wrong time. Okay, only get divorced at the peaks, right. So time your divorces, that’s what I always say. But that’s what happens. So the little guy as the market is going down, usually continues to quite happily rent. Okay? If they’re a renter, you know and what i’m talking About as the little guy that’s renting now, and you move into a market cycle where the real estate prices are going down, and the little guy stays and says, Well, why would I buy now? Prices are going down. And that guy has to get bathed in that media bath for a long time. And then he hears Oh, now prices are going up, you know, a couple years later, the cycle switches, and here’s prices are going up. And he says, oh, wow, maybe I should think about buying. And then he thinks about it for a while. And he hears a lot more news and time goes by. And then you know, everybody’s making multiple offers on property, things are going nuts. They’re going absolutely crazy. It’s getting frothy, you can you know, if you’re paying attention, and you’re smart, and you’re educated, you know, it’s a bubble, right? And then the little guy finally jumps in. And it’s not at the top, usually, but it’s near the top that the largest amount of people get motivated to buy. You know, you saw this in tulip mania in Holland, what, a couple centuries ago. It just happens in every market. This is the way it works. This is the way you know the way markets interplay with human psychology. So the answer to the question, that was really the question, is you’ve got to make sure you follow my commandment number five of the 10 commandments, Thou shalt not gamble. The property must make sense the day you buy it, or you don’t buy it. And that cash flow is pretty reliable. Appreciation and depreciation. They are darn hard to predict. And I have never met or heard of any guru, or known anybody that can truly accurately predict those cycles. Nobody. Okay. Not Bruce Norris, not the guy in San Diego, Robert Campbell, I think is his name. You know, not any of these gurus not Harry dent. Okay, who’s been on many times, but I tell you, though, maybe his oil prediction is coming true. And maybe his gold prediction is going to come true. So we can go off on those tangents if you like. So the answer to your question is, it becomes a game of yield in a deflationary environment where you just sit back and you collect your yield. And in that environment, every other investment is probably not yielding. So, you know, economics being a relative game, if your net worth is $100. Okay, and your neighbor’s net worth is $75 or $50. You’re rich, okay. It’s not about the the the nominal prices, it’s about the relative prices. Okay, and the relative yields. So if everybody else in this deflationary environment is only getting basically what they’re getting now, okay, in the bank, you can get a half a percent maybe give or take in the stock market. You know, most people can see that’s a bubble. Of course, you have dividend paying stocks, precious metals are down, you know, where are you going to get yield. And this is why everybody is rushing toward income property. It’s becoming this giant cottage industry, because it’s the only thing that makes sense. And I don’t think we can say we’re in a deflationary environment. We’re in an environment the past couple years of very low inflation, surprisingly,
Naresh 18:22
now, I don’t expect the Fed to raise rates when they come out in September, but I do think in early 2016, there will be a rate hike. What will that mean to income property investors?
Jason Hartman 18:37
Okay, so if there is a rate hike, first of all, the Fed doesn’t control long term rates. Okay. So they don’t control mortgage rates directly. But of course, the tone of the Fed does set markets, there’s no, there’s no question about it. I don’t think anybody could argue with that. But they don’t directly control mortgage rates. Okay. So if that happens, remember that three dimensions of real estate concept people that are in marketplaces only have three choices. They can buy, they can rent, or they can be homeless, maybe three and a half choices they can live with their parents. Okay. You know, is, is is a definite truth of your generation, Generation Y generation, right?
Naresh 19:20
Yes, it is pretty common 30 year olds living with their parents.
Jason Hartman 19:24
Oh, yeah. No, I know, it’s way too common. But But anyway, so you have that situation. And that’s the choices they face. So if rates are high, that means that puts housing affordability is usually lower in that high rate environment. So it’s harder for them to qualify harder for them to buy. It definitely has the effect of overall softening real estate prices, which, you know, if you’re a capital gains investor and a speculator, you definitely don’t like that. But if you’re an income investor, usually when housing affordability is low, we see upward pressure on rents. And the reason I say Usually, uh, not always is because of this. I know, I’m hedging that a little bit, I get that. And maybe you notice that in my language is because during the Great Recession, I’ll start this in about 2007 for three years in there between 2007 2010. Oddly, because of all the workouts and the loan modifications, I mean, that was bad. Usually a recessions not gonna be that bad. Okay, that was the worst economy we had in seven decades, everybody knows. But in that time, we didn’t see much upward pressure on rents. In fact, we saw some minor softening and rents, because the government stepped in too much. And we had an election in 2008. And all the talk was, Oh, we’ve got to keep people in their houses. But no one ever asked the question, are they living in a house that they really can’t afford, don’t deserve. And it’s too much house, ie, the school teacher who got a no income dock loan, and they make $65,000 per year, and they somehow bought an $800,000 house, like, explain that, to me. It’s psychotic, of course, right? But that kind of stuff was happening. So the talk was, well, let’s just keep everybody in their house. And so there was so much pressure on the banks to do loan modifications and workouts, and short sales after, after all, was considered that, you know, you have a lot of people living in their house for free, there are still people living in their house for free in the judicial foreclosure states, like Florida and Illinois, right, that it’s just insane. I mean, they got to kick them out and let the market clear and let price discovery occur. That’s a key term price discovery. Okay. So remember, multi dimensional asset class always gives you an opportunity to play the game in different ways. You didn’t ask what if the opposite happens? So I just want to talk about that real quickly. So what if, what if rates stay low, and housing affordability is good, and say the economy improves and wages actually go up, which hasn’t happened in quite a long time, in any real way. And so say that houses look cheap, well, then then the rents soften, but the prices go up, I see non correlating indicators on the multi dimensional asset class. So when that happens, tenants rush out, and they try to buy a house. And so you lose your tenants, your rents soften, and you got to accept lower rents, because there’s downward pressure on rents, when it’s a market where everybody’s trying to buy. So if that happens, your strategy is pay, my value is going up, I feel good refi till you die, or even sell the property if you want. But, again, I don’t often recommend selling. I definitely like the buy and hold philosophy. But you could sell into a 1031 exchange, and defer your taxes into a lower price, more linear type market. And the example there would be that, say, for example, in 2004, you bought something possibly from you know, for me, right? Okay, for my group, it was in Phoenix, and then those prices went way up. And then you sold Phoenix got a capital gain, although your rents were softening and Phoenix at the same time, because everybody was buying, okay. And you sold on a 1031 tax deferred exchange, and then you bought properties. In other more linear markets. At that time, we would have had you buy in Dallas, Houston or Austin, right? Or maybe Charlotte or Atlanta, or Indianapolis, and you would have, you would have moved into the more linear market with better cash flow, stronger rents, and you would have had a nice capital gain. So you, you probably would have been able to take that one Phoenix property and buy two in these markets. And you see how this is just such the ultimate wealth greater. You got you had no tax consequence. You improved your cash flow, took a capital gain, win, win, win, okay, boom, real estate investors. Just, that’s why that’s why you know, so many people who got rich in real estate, and nobody seems to know anybody who did it in the stock market. That’s not an insider. Does that answer the question?
Naresh 24:30
Oh, yeah, that was a great answer. And I think it was complete because he also talked about rates stay low. Now I don’t expect rates to to stay low, but it’s good to know, kind of what would happen if that if that were the case.
Jason Hartman 24:43
We’ll see. Hey, we’re, of course going along, as we always do. I want to postpone the talk on Mr. Donald Trump. But I do want to talk about because it relates to this discussion more gold and oil and China just for a few minutes if we can. But first, I definitely want to encourage listeners to join us in San Diego. If you like these concepts we talked about, we’ve got Jason Hartman University live a two day event in San Diego in the Mission Valley area, and it’s coming up quickly. Okay, so go to Jason hartman.com. Register for that, my ethical bribe is, if you want 30% off of that two day event, email a write a review on iTunes or Stitcher Radio for us. And email the screenshot to us at reviews at Jason hartman.com reviews, with an S, it’s plural reviews, reviews at Jason hartman.com. And we will email you back a promo code for 30% off, we really appreciate you writing reviews for the shows. And we would much appreciate that. So do that. And then right after that, you can go to Jason hartman.com and register for the event with that 30% off promo code. And then of course, we’ve got our super high end luxury event at the end of September about a month later. That is the venture Alliance. The second trip for the venture alliance in stunning, spectacular, Newport, Rhode Island, some of the biggest mansions in the world, definitely the biggest mansions, or the most ornate and incredible and opulent mansions in America and have Wow, that’s gonna be a great event. You know, we’re going to be hanging out with real estate entrepreneurs. And I’m lining up a couple of good speakers for that event. And we’re going to tour the mansions we’re going to have five star dining and venture alliances my mastermind group, it’s pretty exclusive. It’s real high end. So you can check that out at Jason hartman.com. Or ask your investment counselor about that. And we can give you more information about that. But those two events coming up. Okay, no rush. What about gold oil China? In just a few minutes here, what do you want to talk about there?
Naresh 27:02
Okay. Yeah, that’s a lot of stuff. So let’s start with gold. Gold, gold ties in more with what you just you just discussed on inflation fed rate hike and all that gold right now is out about the price is at about 1115. That’s $1,115. And I’m curious to hear your thoughts in general about gold because you’ve been pro inflation. I’m not pro inflation, but you’ve been thinking that there would be inflation and gold is generally tied to inflation. So if you look at a chart of inflation, in a chart of gold, you see that there’s a very strong correlation between the two. Of course, we talked earlier about right now being a very deflation of deflationary environment, which is
Jason Hartman 27:47
No. No. I’m not gonna let you say that on the show. It’s not a very deflationary environment. It’s a we are in an environment with very modest inflation, except in real estate. Okay. I mean, real estate in the cyclical markets has been inflating a lot. Atlanta is even, you know, that’s a linear market that went up 10% last year. Okay. You look at some of the really cyclical markets like South Florida, California, the northeastern the expensive areas in the northeast, and there are way more than that. Okay. So, we it’s not, we don’t have deflation. Okay. I’m just, I mean, do you think we have deflation? Really? I mean, was that is that your stance? I’m just curious. Like, we didn’t really settle on that.
Naresh 28:29
So compared to 2009. The the deflation not even close. Now, I guess I was wrong and saying we’re in a very deflationary environment. But
Jason Hartman 28:40
Let me interrupt you, though. In 2009. Food inflation was high consumer products inflation, except for technology based ones was was pretty high. Okay. So we had real estate. Now that’s interesting, by the way, counter cyclical, maybe. Real estate deflation from the Great Recession. But inflation in a lot of other items. I mean, food inflation was was pretty bad in 2008 2009. Oddly,
Naresh 29:08
Yeah. Well, again, I guess I’m talking more about the rate of change, and overall, deflation as a whole and inflation as a whole. And what you said was, I guess, stagnant inflation or low inflation environments. And so going back to gold, I’m curious to hear your thoughts why it is if inflation is supposedly coming, or if we even had inflation. Why has gold just been tanking so much over the past four years?
Jason Hartman 29:37
And why am I not telling all my listeners to go out and buy gold? Right? Well, first of all, I gotta say, Oh, my God, do we really need to talk about gold again? And the reason I say that, and you may not have even listened to some of these old episodes Naresh, but we have talked about gold. So extensively. I even told my listeners, this was a while back that I was going to shut up and stop talking about gold. But I haven’t talked about it in a while. So it’s kind of worth talking about. And you know, gold is is a measuring stick. Gold is money. I don’t think it’s a very good investment. There’s a good blog article on Jason hartman.com, you can probably find, you could just probably Google it. I think it’s called like seven reasons real estate is better than gold or something like that. It doesn’t produce income. It’s just not a good asset class in any way. I don’t know, we don’t have time to really go into it in much detail here. So just understand. Let’s let’s take that up on the next episode. No rush. We’re at 32 minutes already. There’s just too much to talk. It’s going to take us too long to talk about
Naresh 30:37
Agree. Like you said, gold, oil, China, there’s too much. So we’ll
Jason Hartman 30:41
Yeah, absolutely. Okay. So listeners, we got a lot coming up on that. And I definitely want to get to that. And we’ve got a lot of stuff in the back catalogue on that topic. So there’s a lot there on gold. And I’ve talked about it extensively. And you know what, it has been a while Naresh. So I am glad you brought it up. And you know, next couple episodes, we’ll get to the gold, oil, China topic. And by the way, it’s interesting because oil is down again. And that’s been fairly deflationary. So we’ll, we’ll talk about that. And we’ll see if Harry dent is going to be right about that stuff. Okay, listeners, thank you for joining us today. Go to Jason hartman.com. Join us for our two upcoming events. JHU live Jason Hartman University live in San Diego. And also, you can talk to us about venture Alliance, our mastermind group, we’d love to talk to you about that. And we will look forward to talking to you on the next episode. Happy investing to everyone. Thanks for joining me.
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Really now How is that possible at all?
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Simple. Wall Street believes that real estate investors are dangerous to their schemes? Because the dirty truth about income property is that it actually works in real life.
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To start this Flashback Friday episode, Jason Hartman shares an article from CNN about real estate’s new problem: not having enough homes. Then, Investment Counselors Ari and Sara give a debrief on the last Creating Wealth Boot Camp. Jason also talks about income property bonds, gives investing insights, and shares a “case study” article from The Financial Freedom Report.
Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts visit Hartman media.com.
Jason Hartman 0:09
Hey, this is Jason Hartman, thank you so much for joining me. Do you know what day it is? Yes, it is flashback Friday, where you hear the best of the creating wealth show and you hear some good prior episodes, some good review. Remember, we’ve got almost 500 episodes out. And you know what? iTunes doesn’t even hold them all if you’re an iTunes listener, if you are listening on Stitcher, thank you for joining us. So we want to bring you some good review stuff. Now. What’s interesting about flashback Friday, it’s a little scary for me. I got to be very, very candid with you on that. Because you the listener, you get the chance to hold my feet to the fire. Did I make any predictions? Was I right? Was I wrong? I’ve been right about a lot of things, but I’ve been wrong about a few. So you can give me a hard time about that if you wish. But it’s flashback Friday, and we will give you the uncensored Best of the creating wealth show with a prior episode. So let’s dive in. Here we go. Remember, this is not current. It’s flashback Friday.
Announcer 1:22
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur whose own properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day, you really can do it on Now, here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 2:11
Hey, I don’t know if you saw the article in CNN Money, and it says Real Estate’s new problem. Not enough homes. Just as I have been predicting for about three years now, I knew that when construction came to a standstill, the inventory hangover would be gobbled up, the population is increasing rather dramatically. We’re having some of the biggest birth years since the big birth years during the baby boom, post World War Two and the inventory hangover is being gobbled up pretty quickly. So my prediction again, by the end of 2011, early 2012, we are going to see a rather dramatic shift in the inventory problem. We do have anywhere depending on who you listen to from two to 7 million homes in the potential foreclosure pipeline. However, many of those homes you must remember are currently occupied. It’s not like these are new homes being built that suddenly hit the market just because they’re foreclosure. All this is is a moving around of occupants. So maybe the people that live in those homes now move to a another home, again, filling existing inventory, but the construction machine has basically stopped and you’ve got to remember that it takes a long time to ramp up that construction machine. So again, our philosophy be a packaged commodities investor tie up three or four decade long as I’ll talk about in just a moment fixed rate financing, let your tenants lead inflation that is coming, it is definitely coming pay off the loans. And by the way, I just wanted to address the inflation deflation issue. And we’ll go into this in more detail in future shows. But I’ve been debating with a friend of mine who’s a very knowledgeable guy who has been talking he’s kind of becoming a bit of a deflation as to actually and I think the overall big trend is definitely inflation. And what is faulty about the deflationists argument, in my opinion, is really hinges on two major things. Number one, they say things like the government, the fed the Treasury, whatever, it’s sort of all three of these cannot possibly print enough money to offset the deleveraging that is occurring.
Well, I beg to differ with you, because there is no limit to the amount of money they can print. Look at Argentina, look at Zimbabwe, look at all of the other examples throughout history where the fiat currencies have become totally worthless. So inflation is an unlimited prospect, there is no limit to the amount of money they can print. The number two thing is they say they’ll say things like you know there’s $40 trillion of potential deleveraging but that assumes that everything will be leveraged and everything will be defaulted upon. And that is just simply not true. Now some of it will, some of it already has and that does create deflationary pressure but nobody knows how much of that will ultimately be D leveraged or defaulted upon so this deflation argument just really doesn’t fly with me. So anyway, enough of that. I’ve got some And are here we wanted to give you a little debrief on our boot camp that we had last Saturday.
Remember, you’re listening to flashback Friday. Our new episodes are published every Monday and Wednesday. So Sarah, what do you think of the day?
Sara 5:16
Hello, everyone. The day was great. We had a lot of guests from out of town, which was nice. I want to thank our two guests from Hawaii, Nyota and Emily, thanks for coming out.
Jason Hartman 5:26
We had people come from all around. We had East Coast, we had Hawaii. I don’t think we’ve ever had any people come from Hawaii to our event before, have we?
Sara 5:33
I don’t think so.
Jason Hartman 5:34
Well, I want to say mahalo.
Sara 5:36
Mahalo
Jason Hartman 5:37
And Aloha.
Sara 5:37
We do have some Hawaiian clients, though.
Jason Hartman 5:40
Fantastic. So I want to come visit. Can I come and hang out with you for a while? Hawaii, what a beautiful place. But I wouldn’t invest there. It’s a little too expensive. The RV ratio is not good.
Sara 5:50
And gas is definitely not cheap. So I also want to thank Ozzy from New Jersey. He’s been a longtime podcast listener and exchange many, many emails. So it was great to put a face with the name.
Jason Hartman 6:00
Fantastic. Ari, what do you think of the day?
Ari 6:02
Good afternoon, Jason. The
Jason Hartman 6:05
We’re all being so funny with these greetings, by the way. You know, whenever we get together, folks, don’t we get a little goofy. It’s just funny how we are. Okay, we’re being a little goofy today. Go ahead.
Ari 6:14
Yeah, no, the weekend was great. Actually, there was a lot of new clients there. I don’t think anyone there in the room actually currently owned an investment property. So it was a really good education for them. A lot of people enjoy the inflation talk.
Jason Hartman 6:26
Well, I think I think my mom was kind of an interesting guest. We’ve never had her speak at an event before have we?
Ari 6:31
No. I think everyone liked her because everyone heard the podcast with her on it. And they really wanted to see her in person. In fact, that was a good idea to have her come out. I think that was fantastic.
Jason Hartman 6:39
Yeah, she flew out from Alabama and talked a little bit about her investment property experience. And I think the big message there is, keep the faith. Keep moving along the same path. That’s really what it’s all about. In regards to the number of people there, the room was packed. We had expanded from one section of the ballroom to two sections, and there was one left that we didn’t take. And looking back just like masters, we can we probably should have taken it because we could have certainly used all three sections of the ballrooms. Folks, we really got to ask you, please register for our events in advance, give us notice. We can plan better and do a better job at that. If you do.
Sara 7:12
Yeah, another one of our guests, actually, a real estate broker in San Diego came out. And you know, I always wonder, you know, when when real estate professionals come out, you know, what their intentions are and coming to our seminars, and you know,
Jason Hartman 7:26
Are they spies?
Sara 7:27
Are they spies? You just never know. But no, it was great meeting you, Richard. I know you’re a podcast listener as well. And you know, Richard said that no one does what Jason does, his teachings are money in your pocket. And I think that was just great of you to say that.
Jason Hartman 7:39
Yeah, and I appreciate it. All the kind words also at the break from you as well. And I’m glad that we’re gonna get your wife listening to the podcast now, too, because, because I know that she was complaining that you were paying more attention to my show than to her. So you don’t want to do that. That’s not good for marriage. Right? This is a team sport.
Ari 7:58
I wanted to give a shout out to Phil, our Texas.
Jason Hartman 8:02
Yeah, Phil from Texas.
Ari 8:03
That was awesome. He came out. And a lot of people really enjoyed that market listening about it. And all the deals are going on there. And I think a lot of people got a lot out of that.
Jason Hartman 8:13
Yeah. And we also had Jennifer from Entrust, talk about investing with your IRA and the Roth conversion topic. Very, very hot topic. No question.
Sara 8:21
We are going to give Jennifer more time to speak next time, because we just had a ton of questions. So if any of you are listening and attended, and you have more questions for Jennifer, let us know. We’re happy to put you in touch with her.
Jason Hartman 8:31
And we’ve had her on the show before too. So some more detail there.
Ari 8:34
So I want to also thank one of my clients named Matthew for bringing Jason and I some fantastic Tshirts.
Jason Hartman 8:41
Those were awesome. By the way. The first one, the one, well, he gave me two of them, but one of them. I just love it. It was hilarious. And it’s a it’s a great looking T-shirt. And by the way, his T-shirt company is called Chai America. Yeah, so we want to say that on the air if anyone wants to get one of those, but it was a picture of Tim Timothy Geithner and Ben Bernanke. So you’ve got those two guys that are totally messing up our economic world here. And, and the caption says, The Dukes of Moral hazard. I love it.
Ari 9:10
That’s awesome.
Jason Hartman 9:11
Those are great. So thank you very much.
Ari 9:13
Yeah. Thanks, man. Thanks again for that.
Jason Hartman 9:14
Those were awesome. Folks. One of the things I really want to talk to you about today is the concept of these income property bonds. That’s kind of our little trademark term, income property bonds. So call them IPB’s. All right, like ICBMs, intercontinental ballistic missiles. Okay.
Ari 9:31
And what does that mean, Jason?
Jason Hartman 9:32
Well, what an income property bond is, is a property that is usually a lower price property in a very stable linear market with a fantastic RV or rent to value ratio. And I’ll give you a great example of one and we have these in several markets, but one of them that has been very dependable for many years, and we have a lot of happy clients in is good old Indianapolis. I know we’ve talked about it before, but let me give you an example of a specific property we have right here. Now now folks, I cannot stress to you enough. If you’re interested in one of these properties, you have got to act, lickety split. Because these properties go, they’re just gone right away multiple offers constantly on this property. I’ll give you the rundown. Okay, and I know you guys will have comments on it. So get to that in a moment, but built in 1999. It’s a foreclosure property. It’s a single family home. Again, we’re not crazy about condos here. This is 1200 square feet, it’s $59,000. It does need some minor rehab, that’ll cost about 70 $800. Your total cash into this property is just over 25,000 bucks, it’s $49 per square foot, it would cost you almost double to rebuild that same house today. Okay, so you’re buying it far below the cost of actual construction, the projected rent is 950 per month positive cash flow is listen to this 40 $184 annually on a $25,000 investment. So I just want you to notice what a bond this is, this is better than the crummiest junk bond out there on the market, this cash on cash return, I’m not talking ROI, I’m talking, no appreciation, no additional financing, none of the multi dimensional characteristics of a real estate investment like tax benefits 17% cash on cash return, the cap rate here is projected at 12.5%. Folks, you can’t beat a deal like this in a quality market. Now granted, I know you may have heard these other groups peddling junk properties from the loser city of Detroit properties that are being bulldozed to the rate of 10,000. Homes, this is not a junk property in a junk area. These are yuppie ish communities, these are quality properties, these are properties that have a potential for appreciation in the future, your overall return on investment here is projected at 28% annually. And without the multi dimensional characteristics 17% annually. That’s just a phenomenal opportunity. Just look at it like a bond, compare it to a bond, where a normal bond, you might earn three to 5%, a junk bond, you might earn nine to 12%. If the company stays in business, if you’re lucky, in your savings account, you’re gonna earn 1% if this only works out half as good as projected yourn, eight to 9%. That’s just a no brainer deal.
Ari 12:30
Well, I gotta tell you, Jason, I do a lot of researching, and I’m sure YouTube can attest for that.
Jason Hartman 12:35
I do know that already. Because you are constantly emailing me articles and constantly emailing all kinds of, you know, interesting stuff. Some of it’s a little off the beaten path, I will definitely say,
Ari 12:47
Yeah, well, I love the source information. And I see a lot of websites, a lot of companies out there selling beat up properties, like you’re talking about, and they’re selling them for 4050 $60,000. And they’re 40 years old,
Jason Hartman 12:58
I see the properties these companies are recommending, and one of my former tenants actually bought a couple properties from them. And you know, I’m thinking what is this guy’s thinking? You know, I obviously did not get through to him here is looking at a property in Detroit that is, so it’s an older house. I mean, I saw the property on the website. And it says that the after repair value of that house was like 110 $120,000 for a house built. I can’t remember offhand. I think that was built in the 50s. These are a little 1100 square foot house, folks, I don’t know, you know, I’m no expert on Detroit. But I do know that I hear stories all the time of people buying houses for $1 $1 people buying houses for $500, that the city is just dying for you to take over the house. So someone will pay the property tax bill, and someone will mow the lawn and keep the house secure so that it’s not invaded by gangsters. I mean, there are areas in Ohio and Michigan that are absolute disasters.
Ari 14:00
Well, and here’s what I want to point out, Jason, is that you’re putting $25,000 down in this property and you’re leveraging your money to get a loan.
Jason Hartman 14:06
Yeah, the bank’s putting up the other 75%.
Ari 14:09
So here’s what a lot of people don’t understand. Some people might see a house in Detroit, Michigan for 25,000 say, well, I’ll just pay $25,000 in cash. Can you explain the difference between not having a loan versus having?
Jason Hartman 14:22
Well, you know, it’s definitely better, you know, and we all know this and all the regular listeners know this, it’s definitely better to have financing on the property because you have a partner. But there are some times where paying cash makes sense. And that is in an area like Indy or any area where you have really low priced properties that become those income property bonds. Now, these don’t really exist, the income property bonds don’t exist in much in some of the sexier markets where the properties are a little more expensive, because the cash on cash return isn’t so good. And you need the leverage to amp up the return. your cash flow will still be decent. It won’t be as high when there are these little inexpensive properties, you can pay cash, those lend themselves very well to investing with your IRA, your 401 K, and they just work really well inside a plan. Because inside a plan, the financing is not quite as good as it is outside the plan. So if you already have your four loans or your 10 loans, and you’re maxed out on financing, here, it does make sense to buy with cash. But overall, given the choice, sorry, to your question to end tierpoint, I would rather have a loan on the property, I’m just saying, if you’re maxed out on financing, then the income property bond really becomes something of interest, and you want it to be in a quality area. Look, everybody listening has heard the three main things about real estate location, location, location, right, and there are some areas that look, heck, I could be wrong. But some areas that I just don’t think have any future. And I think one of those areas is really Detroit.
Just a reminder, you’re listening to flashback Friday. Our new episodes are published every Monday and every Wednesday.
Sara16:00
Well, and I’ll bring this up because you mentioned Detroit, I had a client call in he’s been on my email list. I don’t know for two years. He’s attended many of our seminars. And he calls it and he says, Do you have anything in Detroit? And I said, No, please don’t buy in Detroit.
Jason Hartman 16:15
We get the call from these groups that want us to sell their inventory in Detroit. I mean, it must happen twice a week.
Sara 16:21
Well, that’s exactly what I told him. I said, Look, if we thought Detroit was a good market, we would recommend it. We can recommend anything we want
Jason Hartman 16:27
We are area agnostic. We can go anywhere we can recommend look at I’ve looked at properties in numerous countries, we could recommend Romania, we could recommend Panama, we could recommend Detroit, we can recommend Lansing, Michigan, anything you want. But we’re not there because we don’t like it. We don’t think it’s good. We don’t have faith in it. And remember, we have to live with you clients through the life of the investment. And the story has got to work because we’re gonna be here to service you. We’re gonna be here to take care of you. We are attached to the deal. We’re not just selling books and tapes and sending you on your way.
Sara 17:01
Well, and just to finish my story here. So he calls anyone
Jason Hartman 17:04
Did I interrupt you?
Sara 17:05
You interrupted me many times.
Jason Hartman 17:08
I’m such a big mouth.
Sara 17:10
Okay, this is not morning talk. Okay.
Jason Hartman 17:12
All right.
Sara 17:12
So anyways,
Jason Hartman 17:13
They might be listening in the morning. You know what I said before we started recording everybody. Oh,
Sara 17:17
Did you just interrupt me again?
Jason Hartman 17:19
I think so. I’m guilty as charged. Okay. I asked why. Why is it that morning talk shows like TV and radio are so different than nighttime shows. Why is it that in the morning, they always have these chatty people talking and telling jokes and laughing? What is it people can’t wake up? I mean, in the morning, I’d rather just listen to regular news or music. I don’t get it. Anyway.
Sara 17:43
Detroit
Jason Hartman 17:44
Maybe this is a morning show.
Sara 17:45
So the guy calls, he wants Detroit. He’s a longtime listener attended many seminars. And he says, Look, your strategy doesn’t work for me. He says, I’m retired. I’m 78 years old. I’ve been investing all my life. And I just have a bunch of cash. It’s not doing anything. And I so I suggested Indi to him. And you know, long story short, that was about a month ago, he contracted and closed on his first properties in the rehab phase. And he called me the other day just to kind of check and he says, I can’t wait to buy more properties in Indi. And I’m so glad that you know, I chose Indi.
Jason Hartman 18:13
So I mean, you know, that’s a quality city. It’s not a disaster like Detroit. This is just doesn’t work. And the other question we’ve talked about on prior shows, we always get, as you know, what about California? Look, folks, we’ll be recommending California in the future, I am sure. It’s just got to get a little bit less expensive, because it still doesn’t work. The state has way too many problems ahead of that all these states that are sort of the more socialistic liberal states, they’re collapsing upon themselves. I mean, look at what a couple decades of that is done to Michigan, it’s a disaster, California, look at what a couple decades of that has done to California, total disaster. So let it equalize, let it hit bottom, then we’ll recommend it. Nobody really knows where the bottom is for sure. But we don’t think we’re there yet. For sure. They said that it was a recent article, I should have had it with me to talk about here. But that article that our local market specialist in Indianapolis sent us the other day was showing that Indianapolis was the number one most affordable market in the country based on income to home price ratio. And the worst market in the country was Riverside, California, an area that many investment groups are recommending, just like Detroit. You notice we’re not recommending those.
Ari 19:28
One thing I want to say real quick about the seminar. A question that came up a couple of times was people were saying, Well, what kind of weather do these cities have? What kind of dangers do they have as far as storms and floods and earthquakes and people are looking at their markets?
Jason Hartman 19:45
Yeah, good question. They’re all different. Every area has got something California has wildfires and earthquakes. And I’d say if you’re going to choose a natural disaster, the worst of all is earthquake, because earthquakes total destruction and insurance for it is rarely held and very expensive. And there’s a huge likelihood that if there was a giant devastating earthquake, none of the insurance companies could pay the clients.
Ari 20:08
But no matter where you go, whether it’s Indianapolis, East Coast, West Coast, South, North, you’re gonna have something to deal with. snow, west, cold, hot. Yeah, yeah. So So I would say, That’s not a big deal. People just need to get over that.
Jason Hartman 20:20
Yeah, they do. Because every area has something
Sara 20:22
Well, and you don’t have to live there. There’s plenty of people that already do and will rent your place.
Jason Hartman 20:27
The funny thing I get from Californians is, is Houston. That’s been a very good market for us. And I own properties there. And we’ve done a lot of business in Houston in the past, not doing quite so much now, because we haven’t been sourcing really good inventory when we do or recommend it to you. But everybody says about Houston, ah the weather here is just awful, the traffic is bad, etc, etc. It’s sprawling metropolis megalopolis. And you’re right. But look, 6,000,000, 5 6 million people live there. So somebody lives there.
Ari 20:57
Well, it’s a disease that Brian Tracy calls excusitis.
Jason Hartman 21:00
Excusitis.
Ari 21:01
When people make excuses to not buy in these places because they hear things and they’re not living there. So
Jason Hartman 21:07
Good point. Yeah. Sounds like paralysis of analysis and other disease.
Sara 21:10
Well, and just to wrap this conversation up, and I have to run but exactly what Ari said
Jason Hartman 21:14
Are you off to yoga again.
Sara 21:15
Actually, I am. Hot yoga.
Jason Hartman 21:18
Sara, you have such a hard life.
Sara 21:19
Hey, I have a one-hour conference call on the way to hot yoga with a client.
Jason Hartman 21:24
Well at least, you’ll be more flexible.
Sara 21:27
So what I wanted to just say kind of in closing, and you know Ari already sort of alluded to, but I noticed in the seminar that there were several clients that have attended the seminar before or maybe they’d been on my email list. I’ve exchanged emails with them over the last two, three years. And you know, I’m looking and Ari said, you know, nobody in that seminar had purchased through us anyways. And I just want to saym Don’t look back in a year from now and say, I wish I would have purchased when the interest rates were low, and there were so many foreclosure opportunities. I mean, so many of those people I’ve been talking to for so long and they can do it, they just for whatever fear factor is involved, they just haven’t pulled the trigger. And I hope you don’t look back a year from now and wish you would have taken advantage of these opportunities.
Jason Hartman 22:06
Yeah, don’t be the I coulda, shoulda woulda that’s just a very sad place to be in life. If you live in the past, you’d become senile. If you live in the future, as Denis Waitley says, You’re on someday I’ll. Like I apostrophe ll, like I will. Do it today. Make it your now. Look, we are not saying that real estate is gonna start wildly appreciating anytime soon. We don’t think that. We’ve never, we’ve never said that. What we do think, though is that there is a high risk of interest rate increases. And there is just these treasury auctions are not going very well. And that’s directly tied to mortgage rates, folks, you gotta tie up as many packaged commodities as possible little houses in good areas and diverse markets that are sustainable, self-sustainable, and what else are you doing with your money in the meantime? I mean, you put into the stock market, the stock market is becoming very volatile again. I heard a prediction yesterday that the S&P is going to be around 7 to 800, from a very reputable guy who I’ve interviewed on the show, and that the Dow is going to 8000. I predicted 6000, we got to 6400 so we got close. Hey, you want to just share that testimonial? Before you go,Sarah? That was kind of interesting, I thought.
Sara 23:15
Well, let’s see. 30% the price. This is on the seminar, 30% the price and 3,000%, the helpful information of a Robert Kiyosaki seminar. Yeah. And then in parentheses, it says, point 3% the sales pitch maybe less.
Jason Hartman 23:31
Yeah. And what was the, who was the star of the show, though?
Sara 23:34
Oh, the star of the show, of course, puppy.
Jason Hartman 23:37
That’s my dog, puppy, the ROI dog. You’ve heard him in my newsletter. He writes a column in there from time to time and Puppy was there at the Masters weekend and at the creating world boot camp we just had.
Sara 23:46
Yep. And so Thanks, Matt, for that little comment there. I know you’re a listener of the podcast.
Jason Hartman 23:51
Thanks to you.
Sara 23:52
You’re one of you’re already registered for masters weekend in October. So I’ll see you then. Awesome.
Jason Hartman 23:57
Hey, by the way, we have several people registered for masters in October, be sure to take advantage of that early bird pricing. Remember, it does escalate as you go on in time. So planet advanced. Next, Creating Wealth Bootcamp is July 31. That’s a Saturday.
Ari 24:10
I also want to tell our listeners, they can purchase the creating wealth in today’s economy home study course on our website. And you guys, if you can’t make it to our seminar, you got to buy that because it’s just like being here, but you can listen to on your own time. You can read the materials on your own time. And it’s fantastic. It’s a great way to learn.
Jason Hartman 24:27
Yeah, the Creating Wealth Home study course is fantastic. It comes with a complete transcript, the audio files as well as the PDF of the workbook as well. The PDF file. So you get all three of those. And that’s on our website. Jason Hartman dot com. Great point, Ari. Ari, it looks like we lost Sara, she’s off to yoga to learn how to become more flexible.
Ari 24:46
It’s okay.
Jason Hartman 24:48
The other thing is, so we’ve got the next boot camp on the 31st wanted to talk a little bit about one of our clients who just got a fantastic loan modification. And I tell you folks, if you are not asking for your bailout I mean, why should all the banks and the Wall Street firms get the bailouts on your tax dollars and you not take advantage of that? Get a loan modification on all of your properties if you can. These sometimes take a while. You have to be a little persistent, but it’s well worth it. And I’ll tell you how worth it. It was for one of our clients, check this one out. Her rate was 7.3%, I think was 7.325, I’m not mistaken. And this was a B of a countrywide Bank of America countrywide loan modification, and they lowered the interest rate to 2%. Yeah. 2% for five years, she sent me the documents, I read them 2% for five years, and then listen to this. They extended her loan for 10 years. So they took the maturity date from 2038, which was a 30 year loan originated in 2008. And it’s now not due until 2048. Okay. Her payment is dramatically lower. This property is now super positive cash flow, it has turned a so-so property into a fantastic deal by nothing else happening, but the loan modification.
Thank you for listening to the creating wealth show. This is Jason Hartman, your host, and we appreciate you following the show. We have many, many episodes, hundreds of episodes, and some of the older episodes have been archived and placed in our members section. And that applies to this one. So we include a sample that’s about 25 minutes long. And then for the rest of the show, you can go to our members section at Jason hartman.com. Many of the other shows are still in their full length complete version. However, some of the shows like this one are in our members section where you can hear the show in its entirety. And again, you just need to go to Jason hartman.com. And you can get the full show there in the members section plus a whole bunch of other great members benefits and resources, whether it be documents, forms, contracts, articles, other video and audio content, just a great resource, so be sure to join as a member at Jason hartman.com and thanks again for listening to the creating wealth show.
Announcer 27:26
This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email media at Hartman media.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own. And the host is acting on behalf of Platinum properties, investor network, Inc. exclusively.
Jason Hartman starts the show by talking about market cycle predictions and business cycles. He also shares using debt as leverage when purchasing real estate income properties then outsourcing debt to tenants while enjoying the tax advantages. Afterward, he is joined by Naresh, who asked basic but necessary questions to help soon-to-be real estate income, property investors.
Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Announcer 0:12
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in 1000s of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day, you really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:02
Welcome to the creating wealth show listeners from 164 countries worldwide spanning the globe. It’s great to have you here. Thank you for listening. This is your host, Jason Hartman. And this is episode number 622 622. We wanted to do a little more QA, and I’ve got an arrest here with me and he attended our Orlando property tour. What was that maybe two months ago now. He was formulating some questions kind of sitting in the audience thinking, you know, what if I was a new investor, what would I be asking? What if I was an experienced investor? What would I be asking? What if I was a do it yourselfer? versus someone who wanted to be a more passive investor and have it done for me? Or have it done with me? What if I’m those different types of investors? What would my questions be? So Naresh, welcome. How are you?
Naresh 1:51
Thanks, Jason. It’s great to be on. And your Orlando property tour really opened up a new worldview for me, because I’m not a real estate investor yet. But I’m trying to learn
Jason Hartman 2:04
While you’re young, there’s still time.
Naresh 2:06
Yeah. But after going to your tour, I it really got me thinking and I got all sorts of questions because I do want to get started. I just don’t know if now is a time or I should wait or, you know, just just simple questions like that. I want to ask you some of those, because I’m sure many of your listeners, especially your newer ones have the same questions.
Jason Hartman 2:29
Yeah. Okay, good. Well, let’s dive in.
Naresh 2:3
Okay, well, the first question has to do with timing. And right now, as you know, the the Federal Reserve just a little bit just just recently, increased rates by a little bit. I don’t know what impact that’s gonna have on on real estate as a whole on home prices, on property values. But I had a friend of mine told me a couple of weeks ago, say, you know, you should just buy real estate as soon as you can, you shouldn’t put it off, because what if properties keep going up in value. Just do it as soon as you can. And I wasn’t really sure about that. I’ve always believed in investments. As you know, buy low, sell high. Now, I’m not saying I want to sell my real estate down the road. But I still think you should get in at a low price. Well, what do you think?
Jason Hartman 3:18
Well, the first thing I think, is good luck trying to time the market, you’ll need it. Because I have never met anybody, myself included, who’s been doing this a darn long time and been, you know, been involved in 1000s of deals literally, the who can time the market? I mean, it’s just very hard to do, you know, you know, frankly, it wouldn’t be so difficult to time market cycles in stocks, bonds, real estate, whatever, if we didn’t have this outside interference from government and central banks, you know, you really could look at I mean, the profession of being an economist, was created to make astrology look credible. And, and so, you know, predicting these things is very difficult. But if you didn’t have all these outside forces, like governments and central banks interfering in the marketplaces, regardless of what market it is, if you had a truly free market, you really could look at patterns and probably do a decent job in making predictions. But when you have the US outside forces that don’t act logically, that basically govern, whether it be regulations, you know, laws and tax laws and incentivizing people to do certain things like Cash for Clunkers or the gozone tax write off, you know, that changes the dynamics of the market, right? The the bank bailouts and the pressure that they put on the banks to do workouts and that that really is aligned to the rental market for quite a while during the Great Recession. So if you didn’t have all these forces and things acted logically, you probably could do a pretty decent job of making predictions. But since we have these forces interfering in the market, and interfering with what, you know, someone trying to predict, hey, look at, if interest rates go up, and that creates less affordability, then of course, it’s going to help dampen price appreciation. But at the same time, it should put upward pressure on rents. As long as there’s not a lot of new supply being created, new homes being built, and the population is still increasing, right, that would be a logical thing to conclude. But that’s not exactly how it works. Because you get the government in there, and they start doling out more money in section eight, or they start telling the banks you got to be more conservative with your lending or more liberal with your lending. And even in a higher interest rate environment as we had in past years, certainly much higher rates. You know, we saw housing prices go crazy, because even though the rates were higher, the lending was very liberal. And the banks were making loans to people who couldn’t afford their houses. Obviously, this is, you know, this is the, the basis for the global Great Recession, we just start theoretically out of, I’m not gonna say we are for sure. At least that’s what the politicians want us to believe. That’s why timing the market is a fool’s game. So I go back to that old saying, don’t wait to buy real estate, buy real estate, and then wait, don’t wait to buy real estate, buy real estate, and then wait.
Naresh 6:47
That’s a good one. But predictions aside, wouldn’t you know when you’re in an up market or a down market? So here in Florida, for example, I feel like it’s been nothing but up for the past four or five years or so. And right now, I look at some of the valuations on condos, apartments, homes, and I just feel like it’s due for a decline correction.
Naresh 7:15
And you’ll know, you know, people know when these corrections happen, I feel that’s going to be the right time to start looking at property. Am I incorrect on that?
Jason Hartman 7:25
Well, let me ask you this, you say that that market has been going up, up up for what, four or five years now? Yes, I mean, I’m asking you. I mean, I I know I have my opinion. But I think it’s been going up for about seven years. You say four or five years. So it’s been going up, up and up. Okay.
Naresh 7:41
Yeah, maybe six, maybe six or seven years? Yeah.
Jason Hartman 7:44
So So here’s the question, though. How do you know it can’t go up for the next 36 and a half years? How do you know it can go up for the next three years? Or, seven years? Or 15 years? How do you know when it stops going up?
Naresh 8:01
Exactly. No, you’re you’re you’re absolutely right. In that, I guess the only way to, I hate to use the word predict because you just you just said that it’s essentially a waste of time to try to predict. But if you look at history,
Jason Hartman 8:14
Well, you can try.
Naresh 8:16
You can try. But I guess if you were to look at a chart of I guess real estate or real estate ETF, which which I used to own, and you can take a look over the years, you know, the ups and downs, and then you can get a good picture of, you know, once every 10 years or so there is some kind of of pullback or correction or whatever you want to call it.
Jason Hartman 8:38
Yeah, that’s kind of true. That’s kind of true. So, you know, there, there are so many factors, okay. And that’s why it’s just very hard to predict these things. I mean, even if we didn’t have government and central bank interference in the market, okay, and the market was free, we would still be subject to things like the business cycle. If listeners don’t know what the business cycle is, it’s a very broad economic concept. But it certainly is true in the business cycle affects real estate, it affects employment at Aflac affects businesses, and, and you know, what they do they build up their cash, then they build up their inventories, you know, and this whole cycle goes back and forth, right? And it always happens, it just repeats itself. Okay. But even then, the only basis you really have for thinking that the Florida market is overvalued, for example. And the example you gave is looking in the rearview mirror, you can say, well, it was a lot cheaper a few years ago. And then you can also say, I tracked this ETF, which by the way, wouldn’t tell you anything because the ETF wouldn’t be, you know, it’d be probably national. You know, every local market is very different. Like I always say, in a country as large and diverse as the United States. There’s no such thing as a national real estate market. There are about four 100 local markets, okay, so you can only do that by looking in the rearview mirror. And let me just share something with you. And you know, I actually want to read the whole thing, that great, awesome poem, The Reluctant investors lament. Many years ago. I read it on the show. I haven’t done it since then. Can I share that with with the audience? Do you mind? Yeah, of course. Okay. Can I can I read it, it’ll take a couple minutes for me to read this. So this was written by a guy named Donald Weil, and one of our clients David, he is a collector of used books. And at a seminar that I did in Irvine, California last year, he came up to me, and he handed me an entire book by Donald wheel. Okay. It was great. There’s all kinds of great poems in there. The guy was a real estate broker, a real estate investor and a poet. So maybe he’s out of Billy Joel, song piano, man, you know, what was it? Paul is a real estate novelist who never had time for a wife. He’s talking with Davey, who’s still in the Navy, and probably will be for life has great lyrics. I love that song. But what is a real estate novelist? write novels about real estate. Well, this guy writes poetry about real estate. And this is awesome. Because the perspective it gives is from 1977. Okay, and you got a bunch of other questions stacked up. So I don’t want to spend too long on just the prediction angle, because I need to get a bunch of other great questions. But I mean, this is so telling listeners, you got to listen to this because in 1978, I would venture to say that the median price single family home in America was probably around $40,000. Okay, maybe 30 $40,000 in 1978. Okay, and people are sorry, 1977. This is 1977. Okay, it’s probably somewhere around there, check my you know, Google it, you’ll find out I don’t have the number off the top of my head. I’m just kind of guessing, but I bet you I’m pretty close. Okay. So everybody back then in 1977. thought the market was overpriced. It just couldn’t go any higher. Okay. And here’s the poem, written in 1977 by Donald Weil, and I’ve abridged it a little bit to make it a little shorter. Okay, so I’ll read the abridged version my abridging. Okay. He says, I hesitate to make a list of all the countless deals I’ve missed, Bonanzas that were in my grip. I watched them through my fingers slip. The windfalls which I should have bought or lost because I overthought. I thought of this. I thought of that. I could have sworn I smelled a rat. And well, I thought things over twice another grabbed them at the price. It seems I always hesitate, then make up my mind much too late. A very cautious man am I and that is why I never buy when Tucson was cheap desert land. I could have had a heap of sand. When Phoenix was the place to buy. I thought the climate was much too dry. Invest in Dallas, that’s the spot but my six cents warned me I should not and that is why I never buy how NASA how Safa grew North Jersey, Staten Island to what others called those sprawling farms and welcome deals with open arms, a corner here 10 acres they’re compounding values year by year. I chose to think and as I thought they bought the deals I should have bought the golden chances I had then are lost and will not come again. today. I cannot be enticed for everything in 1977 is so overpriced wow that’s really good. Not done yet. Oh hang on it’s almost finished. The deals of yesteryear are dead the markets soft and sews my head at time a teardrop crowns my eye for the deals I had but did not buy. And now life satis words I pan. If only If only I’d invested back then. Now that is a lesson isn’t it.
Naresh 14:22
Wow. And this is is this a classic real estate poem or
Jason Hartman 14:28
It’s called The Reluctant investors lament and it’s awesome. I mean, I love it. This guy. You know, I wonder if Donald Weill is still around. Naresh, can you see if you can find that guy and book him on the show. I love this guy.
Naresh 14:39
Yeah.
Jason Hartman 14:40
He’s awesome.
Naresh 14:41
I’m gonna Yeah, this is it. This is pretty good. Wow.
Jason Hartman 14:43
Isn’t that awesome? I abridged it a little bit. But I mean, it’s, it’s brilliant. You know, look at I got into the business a long time ago, I was just 20 years old. Okay. And I remember when I got into the business, I got in at a time where the market was starting To recover, and things were going up, and you know, about three years into the business, everybody thought it could, you know, two, three it really two, three years into the business. Everybody thought, That’s it, we’re done. Nothing will ever go up higher than this. And and for about two three more years It sure did go up higher than that. And then California specifically experienced its recession. But around the country. It was some markets were doing great. You know, you’d, you’d you’d sell your home. I remember one client I had his name was Glenn O’Brien. I distinctly remember many of my 1000s of clients over the years. I sold Glenn and Leslie, I remember them. Glenn worked at a company called Tellabs and I sold their home in wynwood townhomes in Irvine, California. And as I recall, they were moving to Colorado, I think. And they were selling in California, as I recall, at the time, when you know, the market was just super hot, you put a house on the market, and it would sell in, you know, a couple hours. That would be it was super fast, it was incredible, multiple offers crazy time. And he was selling in the hot market, and then buying in a market that wasn’t so hot. Now, people have done that the other way too, you know, where they’ll sell in the weak market and move to the more expensive market mean, you know, these were homeowners, they’re not investors. But still, even a homeowner views their home as an investment most of the time. You know, it’s it’s relative. And in a country as large and diverse as the US there is no national real estate market, that’s the first thing to understand. The second thing to understand is, over time prices just go up. Okay. I mean, you know, they they may have downward cycles. But this is why we want people to invest in linear cash flow oriented markets. If you’ve got markets with good rent to value ratios, where you can rent a property for, say, somewhere in the neighborhood of 1% of the value per month, then even if the price of the property crashes and goes down, your cash flows probably going to hold up pretty well. In fact, without government interference, your cash flow would likely improve. Because as the market goes down in price, then nobody’s buying and as long as the population is increasing, that’s going to put upward pressure on rents. Okay, so it’s a it’s a counter cyclical, you know, these are like non correlating indicators, right? There, the values and the rents. So, yeah, I just don’t, don’t be too greedy and trying time, the market. That’s the lesson here. And of course, everybody wants to time the market, but show me a successful market timer. I don’t know if one exists. I mean, they all they all do for a while, like, there’s an old saying, everybody’s a genius in a bull market, you know, oh, yeah, I bought my property and you know, it went way up in value, okay, well, then, go buy it, buy a few more and watch them go way down in value, you know, everybody’s a genius until they’re wrong. Okay, and then they’re just gonna be wrong some day and give it all back.
Naresh 18:19
Okay. Gotcha. So, when it comes to timing, and all that your, your recommendation is just get started and buying the real estate.
Jason Hartman 18:27
As long as you’re buying in markets that have good rent to value ratios. Okay. I would not say to do that in, in Southern California, or anywhere in California, or in South Florida, or in the expensive markets in the northeast Washington, DC, New York, Massachusetts, you know, those kind of markets, you know, no way, okay? But in a market, where cash flow is your guide, and you’re not investing for appreciation, and you just look at appreciation as the icing on the cake, hey, if it happens, I can spend it as well as the next guy. I’ll love it. But I’m not going to count on it. What I’m going to count on is his income, I’m going to count on a good rent-to-value ratio.
Naresh 19:13
Got it? Okay. So now let’s say I want to. Now that you told me that I want to get started and actually looking at properties and buying properties. Now I’m not a real estate expert by any means, but I know you in your companies are. So would you recommend that beginner investors go with a company like you to handle all that vetting and to walk people through that process? Or to do something else because I I know you well, I know your companies and I just feel safer knowing that you and your team I can work with you and your team to identify properties and take care of that process.
Jason Hartman 19:54
Well, of course you know answering this question is going to sound, sound self-serving. Of course, I’m going to promote my own business. That’s right, obviously. But, But you know, it’s, it’s, I mean, look, you can do this yourself. You don’t need us. Everybody has access to the real estate market, you can just go online, you can drive around a neighborhood and see a sign and buy a property. Okay? The distinction is, and it’s pretty, pretty giant as a distinction on on the first part on the front end, number one, we are area agnostic. So we do want you to buy properties, because that’s how we make a living. But it doesn’t matter where you buy him, okay, because we’ve got lots of different choices. Now, as we put you, as the client is we put you in contact with our different local market specialist. They are not area agnostic, they want you to buy in their market. You know, if we put you in touch with our person in Atlanta, they’re gonna say, hey, buy Atlanta, it’s the greatest place, we put you in touch with our person in Houston, they’re gonna say buy used, and it’s the greatest place, if the person is in Memphis, or Indianapolis, or San Antonio, or, or wherever they are, you know, they’re gonna say, Hey, I got the best market buy here, right. But that’s why we act as our investment counselors act as a gatekeeper, helping you with a nationwide broader perspective, in saying, look, you know, with with your plan, with your interest, with your risk tolerance, with your time horizon, and the softest part of all with your personality, okay, we’re going to match you up with the right markets, and the right teams in those markets that are going to help you invest, and you can look at them, and there’s no obligation, there’s no cost for any of this stuff. And, you know, if you like their properties, and what their what they have to offer you can buy from them, we’re gonna recommend that you diversify into three markets. So if you’re buying, say, six properties overall by two in each of three different markets, and no more than five markets, okay, three is the minimum diversification and no more than five. So if you’re just starting out, and you’re only buying one property, like say, it’s a really young person, like yourself, right, and you’ve only got the money to buy one property. So you pick a market you buy there. And then you know, a year later or two years later, you do your second one, and maybe you’ll do your second one in another market. Okay? If you have good experiences with that one, maybe double down, but ultimately, as you build a real portfolio over time, and we want you to get you know, a dozen properties, or a couple dozen properties, or maybe even a lot more, okay, we want you to be in at least three markets. So you’re geographically diversified, you take the most historically proven asset class, but you diversify geographically into different markets. The other big, I mean, there are many reasons that you don’t want to do this yourself that you want to do it with us. Okay. Number one, of course, you know, in that last example, you may not live in the right market in which to invest. And it’s very hard to invest remotely without a specialist who can help you do it. Okay. But number two, other than expertise and being area agnostic, and we we can help you exert a lot of leverage over the local market specialists in that market from whom you buy the properties. Because we give them a high volume of business, we don’t do one off deals. I mean, I don’t want to say we never do one off deals on a big deal like an apartment complex, or a mobile home park, we you know, we’re we do a one off deal. But on single family homes, we don’t do one off deals, every thing we we sell through our network is a relationship type of arrangement. So we sign a contract without local market specialists that has some requirements in it that they have to fulfill on behalf of our clients. And we signed a contract with him. And they are always looking at that carrot that we’re dangling in front of them, more business, more business coming from Jason’s team. And that helps you as an investor, get a much better buy, get much better service, get a better quality property, better quality management, and just you just have a much better experience because you have the leverage of our buying power, which is pretty darn significant. Okay. And that’s how we can really, really help you. Okay, so go ahead with your next question. I just want to make sure I mean, there are many reasons, but those are a couple of primary big reasons. But I want to make sure that listeners know
Naresh 24:53
These local market specialists, how did you vet them? How did you meet them and start doing business with them?
Jason Hartman 25:00
Well, in the old days, you know, I’ve been doing this for 11 years now. Okay, this this type of real estate business. In the old days, it was much harder. But nowadays, I just know everybody, you know, I mean, not everybody, but a, you know, it’s a figure a speech, obviously. But I know who the players are out there. I know their reputations. And, you know, I have friends that have worked with them. I have clients that have purchased from them. It when we take on someone new, almost without a doubt, somebody we’re working with already knows them. Okay knows that company that local market specialists. So that’s the best check that we do on them is the is the the informal network, the grapevine, okay? Well, you know, we also search them on the internet, not to say things you read on the internet are totally accurate by any means. But they do give you an indicator, you know, if someone’s got a zillion complaints against them, we know there’s probably a problem here, right? Okay. And we’re not going to work with them. And then, you know, one of our clients at some point will be the first client to buy from that vendor, that local market specialists. And at the beginning of the relationship, we monitor this like a hawk. And we really see how they’re treating our clients. And if it’s bad, we just divert that business to a better provider that provides a better experience for the client.
Naresh 26:28
All right, good. So I guess the last topic we can talk about on this episode is financing. So I find a property through your network that I’m interested in buying or a couple of properties, you get me in touch with the local market specialists. How much money will I need upfront, and what’s the best way to go about getting the lowest possible interest loan, in order to make this happen?
Jason Hartman 26:53
Typically, you will need 20% down on each property. So if you buy, you know, $280,000 properties, you’re going to need about $16,000, each for downpayment plus closing costs, and your closing costs will vary by locality. And depending on the type of financing you choose, okay, and the lender you go with, okay, because that’ll vary a little bit too, but you don’t plan on maybe 4% for your closing costs. Okay, so ultimately about 24% of the price of each property, okay, for your total cash in, in terms of getting the best interest rate, have good credit, you should have about 4%, also of the portfolio value of each property’s value in the bank and reserves, that’s the minimum to cover vacancies or repair items that might come up, you don’t ever want to be in a position where you’re forced to liquidate a property, you know, have have 4% minimum or maybe as much as 10%. But I wouldn’t have more than 10%. Because if you have too much cash sitting on the sidelines, it’s not working for you, it’s not earning a return, you know, so you want to get your money invested, because then it can work for you. Right. So, you know, not more than 10% per property. Okay, so you know, $80,000 property, you’ve got $8,000, in reserves in the bank, just to cover contingencies or problems you could have, right? Hopefully you won’t, but it’s, it’s an emergency fund, okay. And to get a low interest rate, the lender will also look at those reserves a little bit, they’ll Of course, look at your credit report, and your job history, then it’s just a matter of shopping around and getting a good lender. And we will make referrals or investment counselors will refer you to a couple of different lenders and you can see who you feel comfortable with and who has the best rates, and you can go with him or you can use your own outside lender.
Naresh 28:51
Okay, great. Now, one of the things I remember Porter Stansberry saying years ago, he was completely against taking on debt regardless, even real estate that which is considered to be good. He was just against debt in general. And he said, just save up and buy that property with cash. Don’t take out a mortgage.
Jason Hartman 29:12
That’s what Dave Ramsey would say too. And that’s idiotic. But go ahead.
Naresh 29:17
Well, I wanted to hear your thoughts on that because I kind of grew up with that. That type of thinking, you know, debt is bad. Don’t ever get into debt, even if you’re gonna buy. Of course for a car, which is depreciating. That’s just dumb debt to take on.
Jason Hartman 29:32
Yeah, that’s consumer debt. That’s terrible. So here, I’m gonna create a new term. I’m gonna call, I’m gonna call these people debt bigots. They’re debt. This is debt racism. Okay. This is like saying all purple people are bad. Okay. You know, if anybody says that, you’d say they’re a racist, right? Well, this is what people are doing with debt. They’re they’re showing their bigotry against debt, because debt is different. Every Every piece of debt should be treated as an individual. Okay, you know, some debt is good and some is bad. There’s no question that some debt is bad I absolutely. It can be a, you know, it’s a four letter word. So is it a good four letter word or a bad one? It depends. Now, generally speaking debt that you have to repay is bad. But debt that you can outsource to a tenant, and get them to repay it for you, and maybe even pay you a little bit extra every month. You know, this is through the rent, obviously, is what I’m talking about. That’s really good debt. And if that debt is fixed rate, and its conservative, and it’s tied to a good property, that’s a great deal. You know, on many of my episodes, I’ve talked about this, this little trademark term that I have, it’s a mouthful inflation induced debt destruction, inflation induced debt destruction. I just was interviewed on another radio show about this topic. And I talked about what I call the double inflation arbitrage, you know, inflation pays off the debt. Now, granted, inflation is pretty tame right now, admittedly, but you know, over time, it’s there, it’s baked in to the equation, you know, it just has to be ultimately. And if you look at the real life example, that I’ve shared on the show before, and in many of my live events, where I show how inflation has made 10s of millions of people wealthy, I mean, it’s not an abstract theory, it’s an absolute fact, I give this example of the person who bought the medium priced single family home in 1972. For $18,000, they put 20%, down, the interest rate was 7.37%. And if they lived in that house for 30 years, for three decades long, they actually got paid to live there. They not only live there for free, but they also got paid to live there due to tax benefits, and inflation induced debt destruction. And what’s interesting about it is this, this is a really interesting point, inflation over that three decade period was really pretty mild. The official statistics, on average, were only 5.1% annually. Now, you know, the official statistics say inflation is lower than that now, but they’ve manipulated them a lot more. And I’ve done some shows on that quite a while ago, about how Paul Volcker. And, you know, when he was ending his term as Fed chair, they were really starting to manipulate the inflation numbers, and the government has huge incentives to do that. They do it through three basic things. hedonic weighting and substitution. Okay, which I’ve talked about on prior episodes extensively. But, you know, the government has a huge incentive to make inflation seem lower than it really is. Because all the government wages and entitlements are indexed to inflation, cost of living increases Social Security, government payrolls, okay, which are, you know, 20 some odd percent of the economy now, welcome to socialism, okay, but let’s not get off on that tangent. And then, you know, it just makes the population feel happier if a politician can say, hey, the incumbent, you know, inflation is pretty reasonable, right? You know, so they lie, okay, it was only 5.1%. And people got paid to live in their homes for three decades. So imagine if that’s a rental property, and you’re not even paying your own debt, the tenant is, this equation becomes infinitely better than that. So it really is just, you know, it’s the most historically proven asset class in the world, and the debt makes it so much better. But you know, debt debt is a, a powerful thing. And you know, cars are powerful things, they can be used for good or they can crash into people and kill people. You got to be careful with it. You have to be prudent, obviously, and wise, but use it judiciously. And it’s an incredibly powerful tool.
Naresh 34:03
All right, final question. Because I know we’re running a little over
Jason Hartman 34:07
When do we not run over?
Naresh 34:11
So final question on this topic that has to deal with financing. Let’s say, let’s say I, or let’s say someone has a lot of money saved up, let’s say, like a million dollars from the bank, then would it make sense for them to just spend cash to buy multiple real estate properties? Or would you still recommend finding a two?
Jason Hartman 34:29
Oh, no, I’d absolutely recommend the leverage no matter what. Okay? Leveraging amplifies your returns, okay? It lets you beat inflation by the multiple of leverage you use. Okay? So say for example, the property goes up at 6% annually, okay. You know, many people would pick that as the average nationwide appreciation rate of real estate over the course of, you know, a couple of decades, okay. People would usually say, oh, how much does real estate appreciate Then around 6%, give or take, okay. So if it goes up at 6%, and you put 20% down, you’ve got a five to one leverage ratio. Now, let’s say that the inflation rate is the same as the real estate appreciation rate. So in real dollars, you’re only treading water. If you pay cash for the property, you’re breaking even property goes up at 6%, inflation goes up at 6%, meaning your money loses value at the same rate, the property’s increasing in value. So there’s no real gain, the gain is only nominal in name only. Okay? But if you leverage that real estate, and you put 20% down, the leverage depreciation rate is now five times 6%. So it’s 30%. And the inflation rate is unleveraged. It’s still 6%. So now you’ve arbitrage inflation by 24%. Right. So you are creating wealth much faster than inflation is stealing wealth from you. So this is good, but it gets better. But wait, there’s more as they say, on the infomercial, you get another Ginsu knife when you buy two, okay, But wait, there’s more. So you get inflation and do step destruction, in addition to the leverage, and you don’t pay your own debt, the tenant pays it for you. you outsource your debt responsibility to the tenant. This, and you know, not only that, but you know, hopefully you qualify for the tax benefits. And you have all of these multi dimensional things working to produce return on investment for you. Okay. And you know, over the years, as inflation occurs, your rents will be inflating to, or at least they have historically, I mean, rent today is much higher than rent was 10 2030 years ago, right, obviously, so rents are indexed for inflation as well. It just keeps getting better remember, your payment on a fixed rate loan is fixed for three decades, yet you can raise your rents. I mean, someone who gets a mortgage today won’t have to make the last payment until 2046 2046. Do you know that the United States will add almost 100 million people during that time, almost 100 million more people will live in this country. During that time, you know, what that does to the demand of housing, both for purchase and for rent? I mean, it’s, it’s, it’s amazing that the demographics coming at the rental market right now are phenomenal. I mean, investors listening to this should just be thinking, How can I acquire more good quality prudent properties, because I don’t know that that the demographics have ever ever been this good. They are nothing short of phenomenal. Again, without going into that, you know, we’ve touched on it on many prior episodes. So just go back and listen to the last 621 episodes, you’ll get all you need, okay. You don’t need to listen to all of them. But I do want to remind listeners and nourishes you know, because you work on the podcast, we have divided up our feed for those podcast episodes, because iTunes will not hold this many episodes, and a lot of the other platforms out there. You know, I don’t know the exact rules, but Stitcher, radio, SoundCloud, many others, where however, you’re getting this podcast, they only hold a certain number of episodes. So we’ve divided the feed up. So if you go back and listen to old episodes, you got to go back onto the platform and subscribe to one of the archive shows to get the whole what’s called back catalogue of old shows. And, you know, the vast majority of those episodes are there for you to listen to. They’re all free. You just don’t need to pay a lot of money for this education nowadays, folks, you don’t need to pay some Guru 40 $50,000 you can get all you need to know for free, use your money to buy properties, okay? That’s my advice. Buy some properties rather than making a real estate guru rich, okay? That’s what you should be doing. So, hey, Naresh, thank you so much for asking these questions and allowing me to ramble on and ramble on and on.
Naresh 39:41
No, it was, it was very, very helpful. And I guess next time we’ll, we’ll pick up where we left off with structuring deals for tax purposes and property management.
Jason Hartman 39:52
Sounds good to me. Hey, listeners, please be sure that you go to Jason hartman.com and check out some These properties that Naresh and I were alluding to Jason urban.com. Click on the property section you can look at the entire Performa there. By the time you listen to this, we may have another event a property tour or an educational event coming up, click on the event second section and check that out. We’ve got a great online course I’ve never announced this on the podcast before, I don’t think because it was only recently developed. And it’s our last meet the masters from just about a little less than a year ago. It’s all online professionally done. It’s really beautiful. They did a great job with this. And you can find that a Hartman education.com so just my name Hartman education comm you can see all the videos there, you can download the audio file version, so it’s portable. If you hear something on the audio, while you’re listening to it in the car, or while walking or working out or whatever on your smartphone, you can go back and reference the video if you want to see the visual aid. So it’s just a great course. That’s at Hartman education Comm. And then of course, the venture Alliance trip to Dubai is coming up. If you want to take it to the next level, join the venture Alliance and check that out adventure Alliance mastermind.com. So Naresh, thanks for joining me, and we’ll talk to you later.
Announcer 41:18
I’ve never really thought of Jason as subversive, but I just found out that’s what Wall Street considers him to be.
Announcer 41:25
Really. Now how is that possible at all?
Announcer 41:28
Simple. Wall Street believes that real estate investors are dangerous to their schemes? Because the dirty truth about income property is that it actually works in real life.
Announcer 41:39
I know I mean, how many people do you know not including insiders who created wealth with stocks, bonds, and mutual funds. those options are for people who only wants to pretend they’re getting ahead.
Announcer 41:50
Stocks and other non direct traded assets are losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades.
Announcer 42:01
That’s because the corporate crooks running the stock and bond investing game will always see to it that they win. This means unless you’re one of them, you will not win.
Announcer 42:11
And unluckily for Wall Street. Jason has a unique ability to make the everyday person understand investing the way it should be. He shows them a world where anything less than a 26% annual return is disappointing.
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Yep. And that’s why Jason offers a one book set on creating wealth that comes with 20 digital download audios. He shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us.
Announcer 42:41
We can pick local markets, untouched by the economic downturn, exploit packaged commodities investing and achieve exceptional returns safely and securely.
Announcer 42:51
I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government.
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And this set of advanced strategies for wealth creation is being offered for only $197.
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If you want to be able to sit back and collect checks every month, just like a banker. Jason’s creating wealth encyclopedia series is for you.
This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email media at Hartman media.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own. And the host is acting on behalf of Platinum properties, investor network, Inc. exclusively.
Sara joins Jason Hartman to talk about the low-interest rates and how it’s changing the dynamic of the market place. They discuss clients building their portfolios and buying properties with cash and delayed financing to seize the interest rates. They also encourage property holders to engage with their property managers to set expectations and ensure current needs are met.
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This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Announcer 0:12
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution for Real estate investors.
Jason Hartman 1:03
Welcome listeners from 164 countries worldwide. This is your host, Jason Hartman, thank you so much for joining me today. I’ve got one of our great investment counselors here. You’ve heard her on the show before. And that is Sarah, and we thought we would do a little gossiping. No, not really. But maybe a little bit. Oh, I don’t know. Sarah, how are you?
Sara 1:27
Good. Good. Thanks for having me. Again.
Jason Hartman 1:29
It’s good to have you back on. I always have to twist your arm to get you on the show. I tell you, you just, you’re just too busy. You’re a busy person. And there have been a lot of people buying properties lately. And that’s what I meant by gossip. I thought we’d gossip a little bit about them. And you know, I got the greatest note today. I love getting notes like this from one of our clients from a couple of years ago. And this is Oscar and Christine will review the whole note but he said hello Jason. I hope all is going swanky with you. See he knows me. He knows my stuff. Word. I’m not sure if you remember me and my wife, we purchased a bunch of properties from your network a few years back, happy to report that all as well. And I actually quit my job to do this full time. That’s an Oscar. That’s awesome. That is so awesome. We love to get messages like that. And we actually get them with some degree of frequency, but we don’t always mentioned them on the show. It’s just awesome to hear that you and Christine are you’re basically out of the rat race, you’re financially free due to the properties you purchased from us and we just love to hear that kind of stuff. And congratulations, you are you’re on your way or well maybe you’re just already living the good life the sweet life. Congratulations to you. That’s awesome. Awesome, awesome. And Sarah you got another one like that to share? Right?
Sara 2:50
Yeah, well, I kind of wanted to wait because they haven’t finished closing all their deals but they have them under contracts. I thought it was definitely worth a mention. Stacy and Andy from Southern Cal fornia and they are so young. I don’t know exactly how old they are. But I think they’re like early 30s they are almost wrapping up 20 loans between the two of them. Wow. So congratulations on your guys’s progress. I’m so excited for you. And we got a great email from them. So that’s, that’s exciting. I mean, they are just so young and they’re go getters, and they don’t mess around. I mean, they’re tough on their property managers for sure. They definitely know how to manage their managers.
Jason Hartman 3:28
Yeah, no question about it. That’s, that’s fantastic. Folks, this is just a matter of doing it. That’s really all it is. So if you are sitting on the sidelines, thinking and hearing these stories about people investing in real estate and creating financial freedom, it’s nothing more than just doing it. It’s really not that complicated. Many of you have a couple of properties, but you’re not really going big. You know, you’ve got some money in the stock market. The modern version of organized crime, hey, you’ve got, you’ve got some other things going on. Maybe you got a bunch of equity trapped in the house in which you live. And you should free that equity up and make it do something for you remember, there is no such thing as return on equity. I know that is a metric that they use out there. But I’ve proven hopefully conclusively, and you’ve heard me talk about it on prior episodes, that return on equity is a myth. So if you have equity in your home, and here’s the way you know that, look, it’s tax time, right? A lot of you, you’ve probably already done your taxes. Many of you are like me, and you’re filing extensions, which I firmly believe in filing extensions. Many say that that reduces your audit risk, by the way. But the last time I’ve been audited twice in my life, I sent a tangent. I’ve been audited twice in my life. And the last time the IRS lost and they ended up paying A whole bunch of money. So I just have a feeling my friends at the IRS aren’t going to be back anytime soon. But Sara, since you’re here, let’s just talk about audits for a moment. Because Do you remember jack from the IRS? Who back in 2010 basically was like an employee. He was in our office every day. Remember that guy?
Sara 5:18
Yeah. I remember specifically going in the elevator with him every day as we would go to Starbucks, but he would never let us buy him a Starbucks.
Jason Hartman 5:29
Yeah, well, that that’s illegal. I think I did actually buy him a Starbucks once. But it didn’t help me in the audit because I last as far as jack and I went we did we did sit and have coffee a couple of times over at Starbucks and whenever we would go to lunch, we’d always make sure to invite him but he wouldn’t exactly never
Sara 5:47
He would never join us. Yeah.
Jason Hartman 5:48
And here’s it but I lost the audit as far as jack goes, I want on appeal. Okay, so my CPA will if the time Who’s your CPA still. He fought it and I One so who says you can’t fight City Hall, the IRS ended up paying me a bunch of money. That was a big win. But it’s funny, jack, it just shows you how inefficient the government is right? And how these employees, the vast majority of them are just taken advantage of the government gravy train, because I swear to you, jack wood, wood, he’d come to work. And I pretty much knew that his whole day was dedicated to my audit for quite a few weeks that he was in our office. And he would come in and he’d probably get there at about 930 10am and we’d usually get out and maybe leave for lunch at about one. And that was Jack’s day he told me he said yeah, I’m going to pick up my daughter or whatever he would say, or go and pick up my kids at school or something like that and and then just go home. And he just did not seem like the ambitious type of guy working in the private sector that would be on his computer after he went home, doing work. You know, he would. It sounds like pretty much his day was about four hours long. So that was my impression but
Sara 7:08
So wait, I didn’t realize that you lost that audit.
Jason Hartman 7:13
Well I lost it. But
Sara 7:15
Does he know you eventually won?
Jason Hartman 7:18
Oh, I’m sure he does I’m sure he does you know I could probably call him up and rub his nose in it but I’m not gonna that’s not smart. You don’t know that. You don’t do that with a government okay. But yeah, I lost Well, I mean, I don’t know that I really lost but he assessed fees to my account, and he said you owe the government right. And then on appeal, I and I may be technically wrong about what actually happened here but I think my CPA appealed it and then went to Tax Court, I guess in one and it was it was his his rule was overturned and the IRS ended up paying me a few hundred thousand dollars. It was very profitable. I was so glad they audited me. And this is funny that the thing is, that was during the Great Recession, okay. And I was really depressed I felt like he here with all the other problems business wasn’t going so well back then. And things were scary if you if you remember folks back to the news and all the stuff in the media back then things look pretty bleak, okay. And then here I get this call or a letter or both, that I’m being audited and I thought, oh my god, really. And I was I was pretty bummed out. But it turns out, it was a huge win. I’m really grateful. I’m very glad that it happened because it was good. And you know, the IRS actually showed me some mistakes I made that were to my benefit on my return. And so it was it was a great deal. Very glad they came by
Sara 9:00
I don’t know if I ever told you but I got audited right around that time too. And I know how you feel about, like the economy being down. And I remember we were working so hard just to continue business and help people. You know, there were there were some clients that were having some challenges and we were just kind of working through it. And I remember the feeling like getting audited in one of my lowest income, years thinking man, like, What a waste of time. That was just such a small audit. I think they only it was a partial audit. And I just remember thinking here I am like working my butt off and I’m getting audited is here to add insult to injury, right,
Jason Hartman 9:39
Right. But I will remind you there is this great little old book by the late writer Robert Schuller Okay, who was the founder of the crystal Cathedral in Garden Grove, California. And it’s got an awesome title. The title of the book is tough times never last, but tough people do and right around the corner from any bad thing that happens in our lives, it always seems like something good either happens next or something good comes out of it. And we’ve all been through tremendous challenges in our life. You know, if we’re older than 25 years old, we’ve usually been hit with some pretty tough challenges. I remember when I was in my 20s and thinking I was bulletproof and you just a little longer and crap is going to happen to you, okay? And it may be something you put into motion. It may just be from the outside world and outside forces, but you are going to face challenges. I promise. People used to say that I remember being in church hearing about stuff like that. I thought, yeah, life is great. Everything always goes perfectly. No it doesn’t. and stuff will happen. But if you just give it a little time, things turn around. They always Do and, and always look for the silver lining in the cloud. And always remember this one saying that I used to say, when I was training real estate agents many years ago, and through various challenges and tough economic times, and so forth over the years, I would say the key to success in business is to stay in business long enough for something good to happen. stay in business long enough for something good to happen. And the same is true with real estate investors. It is a game of staying power. And so many times investors get discouraged because oh, I’ve got a vacancy. I’ve got an eviction, I got a tenant who beat up my property and now I’ve got a bunch of expenses to repair it. But But undoubtably invariably if they just don’t give up. If they persist, they will get through those bad times. And suddenly, before they know it, just just a little time goes by and as Everything has worked out, and they are loving it. And I’ll give you an example. Our friend Drew, who is your client, Sarah, and drew has been on the podcast, things started out pretty rosy for him. And he had a tough year a couple of years ago with he had a pretty decent sized portfolio. I think he was up to about nine properties. Memphis, Indianapolis where his markets and one year he had a tough year and he was complaining like crazy. This was about two years ago, I think, several repairs and expenses. And he kind of was thinking this is really unfair. And I said drew and you remember you were on this call with me. I said, sell one of your properties. You’ve got a bunch of appreciation in there, sell just one of them to pay you back for all the problems you had and he wouldn’t do it. He didn’t listen to me. He wouldn’t sell one and you know me I’ve you hardly ever say sell something. Okay. And what I mean by that is liquidate, I would say maybe you sell something to do a 1031 tax deferred exchange and reinvest and I I’m in the middle of one of those right now, I’m going to buy two or three houses, with the proceeds from one house, that’s a great deal by cash flow is going to increase dramatically. And that’s not what I mean by selling in this example. I was actually saying liquidate one, take the money out and use it to pay yourself back, and then some extra for the problems you had. So you’ll you’ll shut up and you’ll be happy, right?
Sara 13:24
Yeah. I mean, why not? Give yourself a payday and give yourself something to get excited about and even if you’re going to reinvest that maybe you get rid of one of your headaches and give yourself that payday. I like payday.
Jason Hartman 13:36
All right. Okay. But But he didn’t do it. I mean, I’d rather have you have your payday through the refinance through the refi till you die program that we’ve outlined. And if you’re a new listener, you don’t know what that is. Go to Jason Hartman comm use the search bar in the upper right and type in refi till you die, several podcast and episodes and diagrams on that exact topic. really powerful but He didn’t listen to me. He didn’t sell. He kept everything. And he just told me a couple of weeks ago, he said, You know, I just I just want to tell you, Jason, I had a really good year last year with my properties. I am doing great. And so it always turns around, folks
Sara 14:18
well, and sometimes you have to make some changes. You know, I remember he made a big property management change, I believe it was in Indianapolis, that that property manager may have helped him turn that portfolio around a bit and get a cash flowing a little bit better.
Jason Hartman 14:31
You know, there’s an old saying that everybody serves a purpose. At the very least they can serve as a bad example. And, and I’d say his former property manager served as a bad example. So, but they, they helped him push him to finally make a change. And I think that was definitely good.
Sara 14:51
Yeah, I want to make sure our clients know it. I know we talked about this all the time, but don’t be afraid to manage your managers. You know, if something doesn’t seem right. They charge you for a repair that just seems way too expensive. Question them on it, look at your statements. Do you know go quick google search or, you know, pick up the phone and call a contractor or you can even go on home depot.com and see how much that part costs. And you can, it’s very
Jason Hartman 15:21
easy to hold them accountable and they’re really, really easy. So definitely do that. And don’t be afraid to self manage your properties either. Sarah, I know you’re not as much of a fan as I am of that. But I think the self management thing’s pretty cool. Now, have you come around to my thinking at all? Are you still firmly a disbeliever and self management or are you somewhere in the middle?
Sara 15:45
I okay, I have something I haven’t told you yet.
Jason Hartman 15:48
Oh, do you use a lot of things you don’t tell me?
Sara 15:51
Lots of things. Lots of lots of things. Okay, so I got a call from I actually talked somebody into self managing, I think It was one of their It was one of their indie properties, actually. And this is Karen. So by the way, congrats to Karen and Rick for putting another property under contract. They’re going on their third in Cincinnati. So they’re making some progress too. But anyways, we were talking the other day and she was kind of complaining about, you know, her property management company. And I said, well just think about self managing that one. It was already leased. She loved the tenant. I think the tenant was complaining about a repair taking too long. And anyways, she came around to it and she called me and she was so excited. You know, she is self managing one of our properties and she loves it. And I turned her on. What’s that website? You told us all about it meet the Masters cozy? Was it cozy,
Jason Hartman 16:45
cozy Co Co. Co yeah.co. co.
Sara 16:48
And she plugged into that for the rent checks and she says everything’s going well. So yeah, I’m coming around to it. I’m not self managing any of mine yet, but some of our clients are they’re doing well?
Jason Hartman 17:01
Yeah, yeah, no, that’s good to hear I really the the biggest challenge in our business is property management. And sometimes the biggest challenge is property managers. Okay? Now, you’re far better off doing it through our network than doing it yourself. Because if you try it yourself, you’re going to have just zero leverage. Alright, but doing it through us, we’ll make that property management experience better for sure. And the property manager experience I want to distinguish those two, but it’s still it’s still the biggest challenge. I think the rest of it’s pretty darn easy. You know, management is where the rubber meets the road. And you really, you got to pay attention to it. There is folks, if if you’re listening for the first time and you’re thinking, well, I thought this whole real estate investing and building a big portfolio, the idea was to have passive income. There is no such thing as passive income. Okay, it doesn’t really exist in any oral I would get casually say, Yes, a real estate portfolio is passive income. But if if you are, if you have any investment out there, including in the bank, just a bank CD, and you’re treating it passively, you’re gonna lose. So really no such thing as a truly passive investment. There are varying degrees of passivity. And this is pretty close. So
Sara 18:22
yeah and and just don’t let your motion your emotions get the best of you. I mean, it’s really easy to get frustrated with somebody especially when you’re mostly dealing with them over email and it’s not very personable all the time. But you know, when you have a management concern, take it seriously. Do what you can to make it as painless as you can, you know, get the best deals on rehabs get your properties leased quickly, but you know, just constant communication with your property manager through those issues if you have them and then this isn’t this isn’t difficult, but just be engaged. You just got to be engaged. Okay. Yeah. Don’t get frustrated too quickly. A lot of times we let our emotions get the best of us. Even so many times somebody will be really upset and then we talk through it. We get the issue resolved. And the week, a week later, they’re like, all excited and got home about it again.
Jason Hartman 19:13
No, yeah. Well, the old saying, don’t sweat the small stuff. And then remember, it’s all small stuff. So yeah. Sarah, should we talk about the property tour? Yeah, coming up. I mean, this is not 100% confirmed, but it’s, it’s, it’s 98% comfortable.
Sara 19:30
And initially, we you know, we were talking about a Memphis tour, and we love Memphis but there’s roles in the inventory sometimes and and that’s kind of what we’re seeing right now is you know, after our meet the Masters a lot of properties sold. Now they’re working a lot is like an understanding.
Jason Hartman 19:48
Yes. Okay. A 10 ton. Yeah, more than a ton because a house just one house I bet weighs more than a ton, but Okay,
Sara 19:55
yeah. What we don’t want to do is we don’t want to put you you know, under contract on our property. That is like still has a ways to go before the renovation is done because all these properties for any new listeners, they come rent ready for your tenant. And so there are there are times when the local market specialists are in their acquisition stage and they’re renovating properties. And we don’t want to just have you sitting around waiting for properties. So we definitely don’t want to take several people to a market to look at, you know, properties that aren’t ready to be sold. So maybe we can do a fall tour. I know a lot of people are interested in Memphis, but we’re getting such great feedback on one of our property managers that I thought doing an Ohio tour would be a good idea. So we’re working on details. I hope it all comes through. We can pencil in some dates and Jason, are we ready to announce some maybe dates?
Jason Hartman 20:50
I think Yeah, we’re looking at early June. So Mark your calendars save the date tentatively, and Just keep that in mind. Okay, we will probably on our next episode or the one after that have this all firmed up for you. So we look forward to seeing you. And this time let’s not do Jq, I didn’t even ask for your vote on this, Sarah, let’s do creating wealth. This one, okay, so we combine it with a seminar, and we split the seminar over two days, so you won’t tire of me too much. And on Saturday afternoon, we do the property tour. We go out to dinner together Saturday evening, we have all the meals together at the event. And that’s just a really great way to casually network and meet other investors. And, again, this isn’t like meet the Masters where we’ve got so many people there and it’s so busy. Property tours are definitely more laid back. We’ll do the seminar over the course of two days, the creating wealth seminar, and then we’ll do the property tour, a Saturday afternoon and early evening and then have dinner that night. So it’s gonna be great. And we’ve had many, many, many, many, many, many I don’t know. Are we up to thousands of people at property tours yet? Probably. We’re over 1000. So far, I’m sure. Oh, yeah, there’s Yeah, maybe maybe a couple thousand people come to our property tours. And they’re great. People love them. So we hope you’ll join us for that. And we’ll announce some early bird pricing, maybe even on the next episode when it gets all firmed up. But I just have to tell you, this brand new hotel that we’ve got, and we’re just waiting for the contract back on it is stunning. It’s spectacular. I love staying at nice places. It makes it makes travel really enjoyable when you stay at swanky places. So that’s, that’s what we’re working on to Syrah. Talk to us a little bit about who’s been buying properties lately.
Sara 22:40
Yeah. Well, you know, a lot of clients a lot of new clients coming through and repeat clients that have been buying with me since 2007, which is awesome to see them, you know, continue to build their portfolios. We recently had Matt in Oregon, do about seven all cash deals. Wow.
Jason Hartman 22:59
Congratulate 77 at a time. Yeah, he
Sara 23:02
did mix it up a little bit. He did Indy, Columbus and Birmingham. And I don’t know, maybe we got to talk them into putting a loan on those properties.
Jason Hartman 23:13
Yeah, well, the nice thing is you can do that delayed financing option, which isn’t categorized the same way of refinances. So if you do it within, I believe six months, you can still get the equivalent of a purchase money loan on refiling those out and they might even appraise for more. So it’s a, that can be a pretty good deal. A lot of investors have used that tactic. It’s a it’s a little known tactic, but just talk to one of our investment counselors about it. They will refer you to a lender who can give you all the good details about that. But yeah, so you may be refinancing or not refinancing, but getting purchase money loans, delayed purchase money financing on those properties, six months from now, and that can be a pretty great deal. So just ask us about it to get more details. When you talk to us, but go ahead Who else? Yeah,
Sara 24:02
we’ve got bill who is a soccer coach, little little guy soccer coach. I think he has girls can’t remember I have a little soccer player. So I remember that
Jason Hartman 24:12
your kids are in all forms of athletics. Every every weekend, Sarah, your Facebook is filled with athletic events.
Sara 24:21
The best I don’t know what I’m gonna do when my kids grow up.
Jason Hartman 24:24
What’s so great about it by the way, see to that to me, that would seem kind of boring, but maybe that’s why I’m not a dad. But I do I do like kids. I think kids are great. I want to be a dad but I don’t want to go sit at those games all the time. But not as much as you do. Why is it your favorite?
Sara 24:39
Well, you see them especially my daughter, my daughter is really competitive. She She plays fastpitch softball, she’s a pitcher, shortstop utility, she can play anything.
Sara 24:49
And she practices she’s got such a good work ethic she practices all week, you know, on her hitting or pitching. And so to see them have a good game and compete to And it’s just it’s just fun and, and then there’s my my son who’s overly confident but doesn’t have the work ethic.
Jason Hartman 25:08
Your son, your son’s ethic so far is the big hat. No cattle ethic, right? self confidence will get you very far in the world even without doing the work a lot of times
Sara 25:18
and he’s so he’s always listening to my calls and you know, my work calls in the car and asking questions, and he’s super into money in real estate. He’s probably going to be your investment counselor in about eight years. So, anyways, yeah, so so build the soccer coach, that was a tangent. And he was actually referred by our friend Gary, and he’s buying some properties in Little Rock and Chicago and, you know, just just getting started in building a portfolio. So congrats to him on his new deals. And wow, I mean, what about what about Brent? Oh, yeah. Brent. Hey,
Jason Hartman 25:53
Brent, you Brent. I love it. I love Brent. Okay, so Brent has been to many of our events. And I am so glad to see him starting to build his portfolio. So that’s awesome.
Sara 26:06
Yeah. And that’s Brandon’s dad who’s one of our venture alliance
Jason Hartman 26:09
Oh. I love Brandon. He’s
Sara 26:11
A young guy and he’s just killing it, baby. It’s awesome. So
Jason Hartman 26:14
He’s doing awesome. And Brandon Brandon, many of you listening have met Brandon and his father Brent, because they’ve been to lots of our events over the years and Brandon’s a fighter pilot and you know, he was with us and Dubai and San Diego in Newport, Rhode Island and and coming up will be on Jekyll Island. I keep asking Brandon to fly his jet over though, but he never does that. I guess the government just doesn’t let you take on the Jets does it? The fighter jets?
Sara 26:39
Oh, if you can take it home or pick me up on the way
Jason Hartman 26:42
That would be totally fun.
Sara 26:42
That’s probably a big No, no.
Jason Hartman 26:45
But he’s such a funny guy. I love him. He’s just great. But yeah, good stuff. Good stuff. Okay, well, sales are very brisk. Now there are a lot more clients than that who have purchased in the last month or so. Or the last couple of weeks and, and you didn’t mention them Sarah because it’s too big. Frankly, but so if we didn’t mention you, we’re thinking about you, and we love it. And we appreciate your business. So thank you for that. Just We look forward to helping you build bigger and bigger portfolios, any things you’re seeing out there in the market questions you’re getting from people, concerns that you have or clients have, that we should address as we wrap up here, Sara.
Sara 27:21
Not a 10. I mean, I always get the question of people say, well, where should I buy? You know, I’ve already bought in Birmingham. I had somebody asked me the other day, Sean asked me, you know, I already bought in Birmingham, I’m thinking about doing some more deals there. But then he saw my Atlanta email with a couple of properties. And he said, Well, what about Atlanta? Is it risky there because it’s more of a hybrid market. He didn’t say hybrid market, but that’s what he meant, I think. So he just asked, What do I buy? Where do I buy, how do I diversify?
Jason Hartman 27:50
Right, right. Okay. So the answer to that question is, there is no perfect answer on where to buy right? It just depends on your risk tolerance. Your time horizon. But this isn’t this is not an inexact science. Okay. Just Just, of course understand that. But I think one of those questions in there was about Atlanta. And is Atlanta, a more risky market than, say Memphis or Indianapolis? Or some of our Ohio areas? Right. Would that be a fair question, sir?
Sara 28:25
Yeah, that was that was pretty much it.
Jason Hartman 28:27
You throughs Yeah, it’s slightly slightly more risky because it’s a little bit more of a hybrid market. It’s not as linear. That means prices have run up more, but people have made more money there. I mean, look, it’s not it’s not Miami. It’s not Los Angeles. It’s it’s not Boston. It’s those are the really risky cyclical type markets. Right. And there are many more of them that I didn’t mention, but Phoenix and Atlanta are kind of in between. So
Sara 28:56
Yeah, but I think Atlanta’s settled down a bit.
Jason Hartman 28:59
I agree.
Sara 29:00
Hedge funds kind of came in and they laughed. And what I said to this client is as long as you lock in a 30 year fixed rate loan and the cash flow makes sense the day you buy it, which it does, it’s really hard to lose. Because if the values go up, you know, and down a little bit, your loan, your payment doesn’t really change. And the only the only concern would be, you know, if your rents went down, which, again, there’s no guarantee, but historically speaking, you know, we don’t see a big dip and runs, you might see it teeter a little bit, but historically speaking rents, you know, go up. So, as long as you’ve locked in that you’re not on an adjustable loan, you know, those that was when things were risky was when people got into those risky loans. And I read an article yesterday that rates I think, nobody ever talks about when rates go up a little bit. I guess they went up a little bit and as of yesterday, reading this article, they were back down to historic low which is awesome. So take advantage of those low interest rate loans. They’re still here,
Jason Hartman 30:00
They were incredibly low. And I just can’t believe they haven’t gone up yet. I mean, it’s amazing that we can defy gravity this long I, I’ve been famously wrong on that prediction about higher interest rates. It makes no sense the rates need to go up, they should go up. Nobody, either in politics or the Federal Reserve, wants to ruin the party. During their tenure, the only one at the Fed who was willing to do it, and it took a lot of guts is Paul Volcker, who broke the back of inflation set off by the Jimmy Carter era and really even going way back to Nixon. But yeah, nobody wants to take away the Punchbowl. When they’re hosting the party. They always want to let the next person do it. And so Janet Yellen, Ben Bernanke key Alan Greenspan, that’s all been the same, same deal all the way along there. They’re Keynesians, they’re there. They’re sellouts, but when you might be thinking Listen to me, well, Jason, why are you saying Same now why do you think interest rates should go up? Because the situation is not healthy. This is these are artificially low rates. And they should not be that way. It changes the dynamics of the marketplace. It really hurts older people It hurts Savers, it hurts people with money, it encourages a too much risk taking. And that risk taking has a business cycle to it. The higher they fly, the harder they fall As the old saying, right. And that’s exactly what happened in the last financial crisis. You got to slowly take away the Punchbowl. And really just just rein it in. It’s too much. It’s too much it’s too much. But anyway, that’s my opinion, and I’m not going to get my way so but But listen,
Sara 31:47
Jason now get his way. I
Jason Hartman 31:49
know I don’t get my way all the time. But what I will tell you about that is look, take advantage of it exploited use it to your advantage. Stock up on that cheap debt while you can while it’s there It’s It’s It’s wrong. It shouldn’t be this way. But from a personal perspective, heck exploit the hell out of it. Absolutely. Absolutely. So I do want to say something else. You know, Sarah, is there been any progress in opening any of these other markets that we’re working on? We’ve, we are looking but we just a lot of this inventory is just junk out there. And a lot of these providers, these local market specialists would be local market specialists, I should say. They’re just, they’re just not good operators. For example, I love to consider being back in Phoenix or Charlotte, or many other cities around the country and Atlanta has calmed down a little bit because the institutional money the hedge fund type private equity money isn’t so present there. The same is true with Phoenix, although Phoenix is still pretty darn expensive. Any any thoughts or progress there? Sarah, I know you’re you’re working on this every single day as am I
Sara 32:59
Yeah. While we are working on and I almost don’t want to mention it because we’re still doing some number crunching, but we’re looking at Tampa. I know everybody wants Florida and we’re working on numbers and get the numbers to work. That might be an interesting market.
Jason Hartman 33:15
And it’s not just about the market. It’s also about the team about the provider there. There are lots of lots of places to invest. There are lots of deals out there. But if you’re not going to get a group that stands behind that deal, and takes care of repair issues and takes care of management, you can have the best deal in the world but still have a terrible experience. And we have learned that lesson too many times over the years. And we don’t want you to have to learn it by first hand experience.
Sara 33:46
And you know, we’ve also got we’ve got a new provider that does Nashville again, I hate to bring it up. We’re looking at the numbers again, everybody always asks about Nashville. It’s an exciting The market. I don’t know if we could make it happen if the numbers work. We will be bringing you Nashville.
Jason Hartman 34:07
We will see we will see. Well, that is that is the the home of Taylor Swift so it can’t be all that bad. I think I almost got arrested there for stalking her. You heard that story. That’s a joke, by the way. But
Sara 34:20
Speaking of Taylor Swift, there’s an awesome video on Jason’s face that we posted yesterday.
Jason Hartman 34:29
Great. That’s your daughter interviewing me six years ago, Sarah, about Taylor Swift. And I just thought that was so funny.
Sara 34:36
Jason. Jason says, I’m he’s 28 and he wants to be a rock star.
Jason Hartman 34:41
That was my future goal. Exactly. Yeah. I love it. neither of which will will come true or are true. Yeah, funny stuff. All right, good. Well, Hey, folks, this was a very casual unusual episode. It’s just a chit chat with Sarah and I, but we hope you enjoyed it and got some benefit out of it. Let’s wrap it up, Sara, any any other thoughts you want to part with?
Sara 35:03
I know we appreciate you guys. We appreciate you listening and feel free to call or email anytime with your real estate investment questions we look forward to hearing from you.
Jason Hartman 35:12
We’re here to help, we’re happy to help. I shouldn’t give out my voxer one more time, because I haven’t been doing that lately, I got kind of overwhelmed with voxer messages and didn’t get time to play them on the air, which I know I’ve got to do. I’ve got a bunch of them saved up here. But it’s j Hart 88 on voxer Vo x er just download the app. And you can contact me there. And we can actually have a virtual asynchronous conversation, I will play them on the air. So that’s better than going to Jason Hartman calm and using the message app on there for your questions. And I know I’m behind on those two folks. The nice thing is that voxer really allows for a nice two way conversation. And that clarifies a lot for both you who’s calling in with a question and for the listeners on the air when it’s played on the air. We really get it more specific So, good stuff. Thank you all so much for listening. Go to Jason urban calm for the update on the property tour coming up. It’ll be on the website soon when we get it all confirmed 100% the dates are early June on that first weekend of June, and venture Alliance mastermind.com venture Alliance mastermind calm. We updated that site yesterday, you can find out more about our trip to Jekyll Island, the birthplace of the Federal Reserve. So that’ll be fascinating. I hope you join us for that you can join as a guest, and we will look forward to talking to you on the next episode.
Announcer 36:36
I’ve never really thought of Jason as subversive, but I just found out that’s what Wall Street considers him to be. Really now How is that possible at all? Simple. Wall Street believes that real estate investors are dangerous to their schemes? Because the dirty truth about income property is that it actually works in real life. I know I mean, how many people do you know not including insiders? Who created wealth with stocks, bonds and mutual funds? those options are for people who only want to pretend they’re getting ahead. Stocks and other non direct traded assets are a losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades. That’s because the corporate crooks running the stock and bond investing game will always see to it that they win. This means unless you’re one of them, you will not win. And unluckily for wall street. Jason has a unique ability to make the everyday person understand investing the way it should be. He shows them a world where anything less than a 26% annual return is disappointing. Yep. And that’s why Jason offers a one book set on creating wealth that comes with 20 digital download audios. He shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us we can pick local markets. touched by the economic downturn exploited packaged commodities investing and achieve exceptional returns safely and securely. I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government. And this set of advanced strategies for wealth creation is being offered for only $197. To get your creating wealth encyclopedia book one complete with over 20 hours of audio, go to Jason hartman.com forward slash store. If you want to be able to sit back and collect checks every month, just like a banker. Jason’s creating wealth encyclopedia series is for you.
This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email me At Hartman media.com nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own. And the host is acting on behalf of Platinum properties, investor network, Inc. exclusively.
Jason Hartman is joined by Sara to talk about the upcoming live events and to applaud clients who have purchased properties. They also discuss assigning business to local market specialists based on their ability to properly support clients and terminating a low performing vendor because they were not doing right by the investors. They also gave information on the next Venture Alliance Mastermind and the courses included in the event.
Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Announcer 0:13
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution. For real estate investors,
Jason Hartman 1:03
Welcome listeners from around the world. This is your host Jason Hartman with episode number 699 699. That means the next episode will be number 700. Wow, I cannot believe how far we’ve come. And dear listeners, we couldn’t have done it without you. Of course we so much appreciate you listening and telling your friends and colleagues and your enemies about the show. And spreading the word as we have listeners in 164 countries, clients from all around the world who are investing in the most historically proven asset class in all world history and that is income producing real estate as direct investors. So you maintain control over your financial future you are empowered. You are the empowered investor You are not leaving your financial future to chance you are not leaving it in the hands of some Wall Street crook, some greedy CEO, some greedy fund manager, some greedy financial planner, you are in control, you are a direct investor. So we are so happy to be able to share all of our knowledge and experience with you over all of these years. And as we come on episode number 700, our very next episode, it’s just been a real privilege. And I want to thank you all so much for continuing to listen and I know what happens. new listeners Let this be a warning for you. If this is your first episode, you are likely to become addicted. Yes, a lot of our listeners become addicted. They say hey, Jason, I listened to the first episode. And you have me with Hello. So, you know that’s from the movie Jerry Maguire. Do you remember that? You had me at hello very romantical anyway, I just remember that reference. You had me at hello. And I went back and I listened to all several hundred of your episodes over the over the following couple of months and kept up with all of the new ones, as you publish them three times a week. We appreciate that. And really, we’ll do our best to constantly bring you the best, most relevant information to help you be an empowered investor. And today, we have our top investment counselor who’s been with me, oh, most 10 years. And that is Sarah. Sarah, welcome. How are you?
Sara 3:36
Hey, good. Thanks for having me. It’s great
Jason Hartman 3:38
to have you back on the show. I’ve always got to twist your arm to get you on the show. So we appreciate you taking some time out of your very, very busy day to talk to the listeners and congratulate some of our listeners on what they’ve been doing. And we want to talk about our upcoming event. Yes, we’ve got well two events really. We’ve got coming up We are announcing on this episode today, Episode 699. And also talk about how occasionally we have to just terminate a local market specialist and we have to just clean house and do right by our clients. Because sometimes you just gotta say, Enough is enough. It’s the United States like the United States, and the declaration of independence from England many years ago. And then, coincidentally, England’s Declaration of Independence, if you will, from the European Union, the Brexit, which we have a lot more to talk about as that goes, but so far right now, that is shaping up with all of the bad that’s coming with it and I said there would be some short term pain, but in the long term, it’s a slap in the face to the establishment and the One World Government, and I think it will be great, great news for England to have their independence from these bureaucrats at the European Union. And that will be good. And we’re here to help you have your independence as an investor from scams from slimy Wall Street people and from bad local market specialists that don’t take good care of business. So Sarah, where should we start?
Sara 5:20
Well, we’ve got a lot to talk about. But I think what we should start with is, I’m going to I have a new label for this year. And I didn’t tell you this, but I’m going to call this the year of the 1031 exchange. Oh, sigh I am into
Jason Hartman 5:33
that. You know, many, many years ago, I postulated my refi till you die plan, which I think is fantastic. But here’s the the good problem to have, if you will. So many of you have properties that have appreciated too much. It’s a good problem to have. Right? But tell us more about that, Sarah?
Sara 5:57
Yeah, I’m just noticing a huge pickup in And clients that are contacting me, some of them are, you know, properties that they bought through us and they’re, they’re selling them for, you know, some some twice what they paid. And you know, they’re just what happens is the property values go up and the rents hadn’t quite caught up yet, which may or may not happen depending on the market. And so, you know, there becomes there becomes disconnect between that rent to value ratio that we, you know, we preach here,
Jason Hartman 6:26
absolutely, the RV ratio becomes disconnected. It’s not tethered to the value of the property. And here’s what always happens in Sarah, I just wanted to jump in when you said that because the rents, you know, haven’t caught up yet and they may not catch up. They will always catch up, if you will, in these linear markets. The problem is they they usually catch up when the cycle is turning. So that’s when values softened a little bit. And the rents have been going up steadily over the years. affordability declines, and there aren’t as many people buying. And that’s when you see that sort of equilibrium, if you will. And in many of the markets that are, in fact, linear markets, or maybe some of them have a touch of hybrid to them, again, three types of markets, cyclical linear and hybrid markets that we’ve talked about many times on prior episodes. And so the rents always lag, they they catch up very slowly to the prices. But hey, take advantage of it. The 1031 exchange is one of those three great tools that make the single largest expense any of us have in our lives, taxes much more bearable, because income property is the most tax favored asset class in America. So people been doing exchanges. share a little bit of that with us, sir, if you will, like you know, if you happen to remember offhand, where would be a property that maybe they’re selling, and where are they buying and, you know, any any stories from clients on that?
Sara 7:59
Yeah. I’ll give you some examples. And I don’t know if I’m necessarily matching up where the client is selling. I can’t remember where each client is selling their properties. But I’ll give you some examples like, you know, Phoenix, Atlanta, some of the Denver markets, and some of them are like commercial type deals where the cash flow just isn’t as good. But those are some of like, the cyclical markets where, you know, they’ve seen those price increases. They’re there maybe selling one or two properties and buying, you know, three or four properties in exchange, you know, for the one that they sold. We’ve had David from New Jersey, just closed on four in Orlando. So congrats to him.
Jason Hartman 8:36
Congratulations, David.
Sara 8:38
Yeah. And so Orlando is a market where, you know, we did our property tour last November and we had some clients take advantage and and purchase there and so far, so good. And this is this is funny. I don’t know if Joe did a 1031 exchange, but he also bought three in Orlando and he’s also from New Jersey.
Jason Hartman 8:57
Yeah. Maybe they know each other.
Sara 8:59
Yeah, they need to meet Actually, I think they do. I think one referred the other. So congrats to you guys on that.
Jason Hartman 9:05
And by the way, listeners, we don’t want to say clients last names without permission. So that’s why we’re just talking on a first name basis. You know, many of you clients over the years have been on the show, and you know, your last name is out there, without permission from the client, we just want to reference by first name. So we got David from New Jersey bought four properties, and those are in Orlando. And let me just drill down and talk about those because interestingly, one was $89,900. Another one was 99,900. And another one was and and two more were the same price 1099. So those are fantastic. They’re in a couple different cities in the greater Orlando metro area. And then when you talk about Joseph or Joe in New Jersey, also, there we’ve got one for 116 nine, I want another one at the same price. Another one for 1099 Another one for 129 900 or sorry 121 nine. So four properties for each of those. Congratulations. Yeah, that’s great.
Sara 10:09
Well and I’m looking back and that fourth one is actually if you look over that one’s a deal from last year that he that Joe did in Indy so it’s a completely different Omar Sorry, that was an honor.
Jason Hartman 10:19
That’s Indianapolis.
Sara 10:20
Yeah, I just threw that in there. But yeah, I mean, they’re, they’re, they’re doing great. You know, I think that’s a real nice sweet spot that 80 to 120 thousand dollar price point you get a nice you know, I call it a bread and butter rental. Usually they’re they’re going to be you know, like a three bedroom two bath, Mata size property that rents really well. And that’s a sweet spot in a lot of the markets. You know that we do business in Memphis and some of the others as well.
Jason Hartman 10:47
Yeah. And if you don’t like any gluten, stay out of the bread and butter markets. Well, the butters, okay, but the bread is bad for you. So if you’re gluten free, you got to go and buy higher end properties that aren’t bread. Right.
Sara 11:02
So we now have gluten free investors is that no we have
Jason Hartman 11:06
who’s really bad at humor? That’s what we really have.
Sara 11:10
No, I really like that.
Jason Hartman 11:12
Okay, and then let’s, let’s kind of congratulate a couple more of our clients here while we’re at it. Who else we have Sarah?
Sara 11:18
Well, so so we’ve got Raul and he’s from Florida. Now he is helping some family do a big 1031 exchange. And so they’re buying in several different markets. And he’s kind of facilitating it for them. And he’s been a great client over the years. I mean, he’s really built his own portfolio and now he’s helping his friends and family. I want to say we’ve been working with him since at least 2010. And so he’s well diversified. And it’s great to see clients refer their friends and family that, you know, makes me know that we’re doing something right over here. So we appreciate your referrals as well.
Jason Hartman 11:55
Yeah, yeah, we really do appreciate them and and you know, if you’ve been A client of ours that we will take good care of you and any of your referrals. I think one of the main differences between us and the other, this is a very cottage industry, we do a very specialized thing. But there are a couple other players out there who, who are in the biz, if you will. And I think just better than anybody out there, we really have a philosophy number one, more so than others do. And we really understand who our customer is. One of the mastermind groups that I’ve been involved in is a bunch of real estate people and, you know, different rehabbers. And what we call local market specialist or LMS is from around the country. And I gotta tell you, the folks who you see out there who are in this business of presenting and promoting properties to buy and hold investors, a lot of them I really think they just don’t really have a true understanding of who their customer is. And here’s what I mean by that. And it kind of leads to this other point about our, our recent departure, if you will, that wasn’t that friendly, by the way. It was it was moderately friendly. But you know, there was a little, there was a little bit of tough talk in there for a bit back and forth a couple weeks ago, right before I went to Fiji.
Sara 13:21
They just they think
Jason Hartman 13:22
that their vendor is their customer. They think that oh, I gotta be buddy buddy with a supplier and look at we love our suppliers. Don’t get me wrong, we love the good ones that take good care of our customers. But if if if they, you know, everybody, this is human nature, folks, we all know this. We all do this to one extent or another. At the beginning, we’re really excited. We’re really grateful. It’s a new relationship, new business. Hey, bring it on. You know, you’re it’s like the it’s like when you’re first dating someone, right? Everybody’s on their best behavior. They’re dressing Well, they’re, you know, they’re getting ready and, and really taken care of and being considerate of that relationship. But eventually you’re gonna take things for granted. And, and that happens and we got to be constantly on guard against that when we get negative feedback about a local market specialist from one of our clients, whether it be on the on the property maintenance and repair side or the management side, or whatever we get on their case. And Sarah, that’s one of the things I love about you. You know, so many years ago, I remember during the Great Recession, you you were saying you came to me one day and you said, You know, I really think we do something, we really do something special for people we’re really helping them. That’s what this is all about. Look at both you and I I know you are now two financially independent, okay, so we don’t need to do this. We’re doing this because it matters. You know, it’s a cause it really feels Like, it makes a difference. That’s, that’s what gets me out of bed in the morning. And that’s what I get excited about. But
Sara 15:07
yeah, well, Funny enough, I actually had somebody call was a referral from another client. And he called and he said, Well, you know, I want to be honest, I’m, I’ve made, you know, three phone calls, you know, I’ve talked to a couple other people that do something similar what I think is similar to what you do, and now he’s not a podcast listener. So I’m getting them engaged. But you know, this is somebody that just was a word of mouth referral from somebody else who purchased through us. And he said, so you know, what sets you apart from your quote, unquote, competition. And, you know, I first I kind of told him a little bit about what we do and gave him the background info. And I said, You know, I think what sets us apart is that, you know, we actually like, counsel our clients on the big picture stuff and, you know, really talk to our clients and we’re here as an extra set of eyes and ears. We’re not attached to any one market and no, so we were about 10 minutes into the call and he said, You know, he said, I’ve only been on the phone with you for about 10 minutes, he said, But I’ve talked to a counselor quote unquote counselor, you know, from another company, and he said, Man, there’s just been so much add value to this call in comparison to, you know, speaking with that other representative. So, you know, we’re getting a good client feedback. I I don’t really even call it competition these days because and I don’t say that to impress upon anyone or to brag, I just think we do something different. I think that we really do bring value to our clients.
Jason Hartman 16:26
Yeah, I would certainly agree and I know the clients listening who are the listeners who are clients listening would agree with that too. So that’s a great thing and we’re happy to do it and we just we just love doing this stuff because it’s it’s we’re taking business away from Wall Street. We want to move as much money away from these Wall Street Style investments as possible income properties, the most historically proven asset class in the world. Okay, so row, let me See how many properties for Oh, that looks like five properties, right? 12345 I’m seeing five of them here.
Sara 17:07
And these are actually his, you know, his family’s portfolio. I didn’t really take the time to look up his personal deals, but I it’s, he’s working on a 1031 exchange. And so they’re doing great. And then, you know, another client, john was another word of mouth referral, and he recently closed on three in Memphis.
Jason Hartman 17:30
He’s got Yeah, all three are Memphis and those are, let’s just, let’s just look at the prices of some of these. Okay, so one of roles was a little bit more expensive. One 139,901 39, nine, and 124 110, one for 72,500. So, kind of a good mix there. probably have a and b and maybe that 72,000 ones a C plus type property. JOHN 84,900 101. 898 there’s an odd price in 94,900 for John’s three properties. Congratulations, john. That’s awesome. Those are all in Memphis. And then we’ve got Steve, who’s been buying with us for a while. got three. That’s Southern California buyer. Orlando. One in Orlando. Two in Memphis, right?
Sara 18:19
Yep. Those were from this year and he’s purchased others in Chicago and Steve, we got to get you in our venture lions mastermind group and it’s about
Jason Hartman 18:29
times we’re going
Sara 18:31
to get you on the podcast.
Jason Hartman 18:33
You got a great story.
Sara 18:34
I actually just talked to him today and we had to cut our call short because I was telling him I got to record with Jason but right client he’s in So Cal by me and we he’s been to many of our events and we’ve had some some good chats but he’s, he’s doing great you know, he’s, a lot of our clients are really on a mission. In fact, I talked to john and this other client here yesterday. And I mean, he’s he’s on a mission To buy 10 this year 15 next year, he’s got a very aggressive plan. He’s already asking me, what do I do after, you know, my financing runs out, I gotta go commercial, you know, financing. And so we’ve got some clients soon big things good,
Jason Hartman 19:13
good stuff. And then of course, there’s Gary and that’s Gary Pinkerton because he was on the podcast before so everybody knows his name and, and he’s got a bunch more
Sara 19:20
to huh. While he’s working on it. these are these are some deals that you know, haven’t closed yet, but I gotta tell you, you
Jason Hartman 19:27
me and Gary’s 100% Memphis at this point right now, for these new purchases. Yeah,
Sara 19:32
I didn’t tell Gary this, but I had some, like two clients that were pretty upset with me because we, you know, we had like 11 properties in Memphis become available last week. And I mean, like, three came out one day and you know, five another day. And so I was trying to send them out to our buyers as quickly as I got them. And I mean, we literally put those 11 properties under contract same week, and so Gary stole some from under a few I didn’t tell him that.
Jason Hartman 20:02
Hey, Gary, congratulations, the early bird gets the worm As the old saying goes, and and there’s another great saying, I like this one. You know you you’ve heard that good things come to those who wait. Well, there’s a add on to that. Good things come to those who wait, but only the things leftover by those who hustle.
Sara 20:22
I love that. Yeah.
Jason Hartman 20:24
Good stuff. And, you know, we actually I think this was a pretty good lead into our next, maybe a little discussion here as a side. That is we have been really racking our brains. We’ve been going back and forth our internal team on voxer. And on our monthly team calls where everybody gets together. And just on random discussions here and there too. And we’ve been talking about we want to do another property tour in September. And we were thinking Gosh, do we do it in Chicago? Well, right Now if you want to buy a property in the Chicagoland area, they can’t deliver anything to you until late November. If you want to buy a property in Memphis right now, you’re probably looking at somewhere around November also, depending on which provider you’re working with. We were going to do Port Richey, Florida, we you know, that was a that’s a newer market for us. Just it’s a Tampa, suburb, Tampa, Florida that I really like. But Tampa is a little too expensive. And the the provider there just can’t get enough inventory. We just don’t have enough inventory in any one place to be able to host a property tour. And it’s not the first time we’ve had this as a struggle. But we made a decision as to how to approach this problem and make it work so you can still come out and meet our local market specialists. Get a good overview of different markets and Sara, do you want to comment on what we’re going to do? Or do you want me to tell them about it? The big news, this is the big next event.
Sara 22:07
This is the big news. Well, I and we toyed with the idea of like, should we do like another meet the Masters type event? And you know, we decided no, our meet the Masters event is in January, you know, special event that, you know, we do, we like to do that in January, where we bring all of our providers in. So we’re going to do we’re going to do is we’re going to do a new event with new content, lots of good education, as always,
Jason Hartman 22:33
and we don’t even have a name for this event. It’s called the something event. I don’t know what it’s gonna be something about real estate investing, you can be sure that
Sara 22:43
Yeah, and we’re gonna bring some of our top providers with the best inventory to our event in Can I say where it’s going to be?
Jason Hartman 22:53
Yes, it’s going to be in Phoenix. And we do not have a venue yet. But we do have a date because we We’ve literally just decided
Sara 23:02
we don’t have a venue. But we have
Jason Hartman 23:04
here really, folks, we need help over here. We are really all confused and disorganized. I’m just kidding. We’re actually not as bad as we look. But, you know, we’re, we just want to get this out there. So all of you can start making plans. Okay? This will be September 10, and 11th. That’s a Saturday and Sunday, September 10, and 11th. A, the ominous date of 911. I just noticed that. So you can all remember this easily. As bad as that association is, unfortunately, but September 9, or sorry, September 10, and 11th. Okay, in Phoenix, where I live, and we’re assuming another one of our investment counselors will be living in Phoenix moving from the Socialist Republic of California to Phoenix. We will be there with I believe, and we’re vetting and picking now for maybe only three, three or four of hours. teams from different markets. And if, if 50 or 80 of you show up between three or four different providers, we can probably have enough properties for you. But we can’t do this in any one market, because we just don’t have enough properties. If If 40 or 50 of you show up in Chicago land or Port Richey or Memphis or Indianapolis or wherever we might want to say we’re doing a tour. We just we just don’t have enough inventory in any one market. It’s too scarce. So,
Sara 24:36
there’s another thing I want to just mention, you know, that people may not realize is, we don’t want to necessarily overwhelm any one provider either, because we want them to do good rehab jobs.
Jason Hartman 24:51
Before Haven’t we Yes,
Sara 24:53
yeah. I mean, it’s really it’s it’s really a strategic thing to not put you know, 30 people On a property tour, even if we had that inventory, and we knew they were going to be done in a couple months, we don’t want to add pressure and you know, have issues with rehab delays and you know, add, add to that
Jason Hartman 25:12
big a big part of this. And you know, it is a total art. There’s not a science to it, it’s an art, I will say, a big part of this is managing the way we don’t allow business to the local market specialist because remember, these are, these are mom and pop businesses. In most cases, there’s really only one exception in our network. That’s not sort of some level of a smaller mom and pop business is a very fragmented industry. And it’s a very specialized thing that we’re looking for in these providers, these vertically integrated companies that provide acquisition, rehab management, either internally or externally, and ongoing construction support. And there just aren’t a lot of companies that do this stuff. So, knowing how to dole out the the business to these different providers is a real art form. And Sarah, you engage in this constantly, you’re always talking about this. Almost every other conversation we have is about this topic, I would say,
Sara 26:16
well, and I’m so thankful to our clients because we’re getting constant feedback. You know, we know where the property management teams are doing the best, where the rehabs are the best, you know, where the rehabs are slowing down, where there’s turnover in property management teams, for example, you know, our clients are giving us this constant feedback. So if I know a company’s going through some turnover, you know, I might just say well, you know, let’s let’s take a step back from that market
Jason Hartman 26:40
way off of them right
Sara 26:42
yeah, let’s let’s have them you know, get out get all their ducks in a row. And you know, we can jump back in when it makes sense. No, no, sir. I’m surprised you
Jason Hartman 26:49
didn’t say they should get their chickens in a row. I know. I knew you were gonna say that.
Sara 26:54
I didn’t know you were gonna say chickens, but I need to pick that one up. When else yeah.
Jason Hartman 27:00
Get their ducks in a row
Sara 27:01
their dogs in a row, whatever you can put anything you want in a row. I’m very satisfied.
Jason Hartman 27:07
And and for new listeners that don’t understand the reference, Sara always revises famous old sayings. Instead of shoot yourself in the foot. She says treat yourself. It’s funny. It’s pretty funny, though.
Sara 27:20
Yeah. So I, you know, this is a good segue into, you know, what we wanted to discuss kind of firing a recent provider, if you want to call it that, but I know you want to kind of chat about
Jason Hartman 27:32
that. And, you know, every so often we I don’t want to say this was a bad apple because i don’t i don’t think it was a bad apple. But it became I think this relationship, just frankly, got stale. And we sent them a ton of business. They were making a lot of money. And then they just got really, really, frankly really cocky, you know, to where they they just didn’t appreciate it. It’s like they Almost acted like the customer was their enemy or something, you know, it was kind of shocking to me,
Sara 28:06
it was really unbelievable. And they were doing going as far as to making, you know, they were, it’s like they had some challenges with their management company about a year or so ago and, and they made some changes to their purchase agreement to try and fix those problems with the management company. And they kind of like snuck some things in their purchase agreement that weren’t in the investors favor. And so little by little, I was getting that client feedback, just realizing that the agreement was not in alignment with what the clients were trying to do. And we tried to, you know, get them to make some changes. And, I mean, we’re talking about things that like all of our other providers, don’t do it just not industry standard.
Jason Hartman 28:48
So let me tell you what happens here. That provider that local market specialist, I know who else they’re working with, okay our so called competitors and they will simply Go to them and say, Hey, I have more inventory for you now, because I’m not working with Jason’s group. And guess what? They’re working with them because they did not stick up for the customer the way we did, and so that that customer, that investor will have these lesser experiences, these these not as good experiences with them, because they went through another provider that wouldn’t go to bat for the client. That’s the difference. You know, they’re, they look at the local market specialists wants the provider who’s easy to work with, okay, or wants the referral source like us. It’s easy to work with, it doesn’t give them a hard time. Right. And, you know, we give them a hard time we call them out on some stuff. And so finally, this guy just said, Hey, I can’t do it anymore. He kept wanting to have private conversations with me as though he’s gonna convinced me to sell out my clients and I’m not I’m not doing it. You can have conversations with our whole team. Everything’s transparent. That’s it, you know, you’re not going to talk me in anything that they’re not going to agree with. Sarah, I don’t know why he needed to pull me aside and not include you in the conversation is if he’s going to, I’m going to overrule you and a client, you know, can’t break. It’s ridiculous.
Sara 30:24
Yeah, we just, you know, we want our clients to be taken care of. We want property management agreements to be reasonable and fair. And, you know, there are some things you have to like negotiate your management agreements, and some of them don’t really budge on it. And sometimes you just have to go with another management company. And that’s kind of what happened here. We said, Okay, if you’re not going to make changes to your management agreement, we’re going to refer them, you can sell them properties, but we’re going to refer them to another property manager. They didn’t like that at all. They didn’t like that. And so they they slipped something in their purchase agreement that required the buyer to use their property management company or their foods.
Jason Hartman 31:00
sneaky bastards.
Sara 31:02
So it was like borderline unethical and we call them to the table and I think we mutually agreed that this relationship was not working. And so you know, it is what it is. But Justin
Jason Hartman 31:13
just so you know the saying is called him on the carpet.
Sara 31:18
We called him on the carpet.
Jason Hartman 31:21
We call them on the call them on the table. You still do it. It’s so fun. I just love it. I love it. It’s great. Yeah, so So anyway, onward and upward. We’re done with that relationship. But you know, Sarah, it reminds me on days when the stock market the modern version of organized crime when it’s closed on holidays, CNBC, the mouthpiece for the modern version of organized crime, Wall Street, will show these reruns and they’re these really cool documentaries. And they’ll have documentaries about Walmart, for example, and I remember watching the Walmart one, I think I’ve seen that one. twice now. And the reporter says to the CEO of Walmart, he says, you know, these suppliers come in here to Bentonville, Arkansas, and they leave beat up. Like you just, you know, Walmart will not, will not give them a good enough price for their merchandise. If they want to sell their product, their widget in a Walmart store. You guys are just too greedy. You’re not you’re not giving them enough money for your suppliers. And I’ll never forget it that the CEO of Walmart looks right at the camera and says we are the agent of the customer. And our duty is to bring our customer the highest quality product at the lowest price. We are the agent of the customer. And that’s how we feel. We are the agent Where the investor, not for the supplier, the suppliers important to be sure we love our suppliers, the good ones, but we get a bad apple and we’re gonna get rid of them. Because you know, there’s just life is too short for that. So that’s the scoop there.
Sara 33:15
And just so our clients know that doesn’t mean you got a bad property and that doesn’t mean you get rid of your property, you know, we will help you find
Jason Hartman 33:21
out where you might want to get rid of your manager.
Sara 33:23
Well, if it’s an affiliate manager, yeah, and then we’ll we’ll let you know who our other clients are using in the marketplace. And I mean, that’s the power of this network is, you know, we, we know of other property managers and you just
Jason Hartman 33:35
lawns and we’re getting continual feedback, and we bring that feedback to all of you, and that is so important. Our job is to aggregate feedback, aggregate knowledge and share it back with you, our clients. And that’s what we’ll continue to do. Okay, Sarah, we got to wrap this up. Let me just tell you about not one but two events. Of course, there’s the event we already mentioned, though, we don’t know what the heck It’s called event yet. And that’s on September 10 and 11th in Phoenix, Arizona, and we don’t know where it’s going to be. But you know, I mean,
Sara 34:10
like, should we give away a pair of tickets to the investor that names the event?
Jason Hartman 34:16
Now, that’s my idea. But you know, we’re not set up yet. Maybe we’ll announce that on the future. That’s a good idea. That’s pretty good. But But let me just tell you what the content will be built around. The content here is going to be built around using software to evaluate and manage your real estate investments. And of course, you know, with our acquisition last year of real estate tools, this fantastic software company that has some fantastic excellent software products, including property tracker property evaluator property, flipper, some great things. We are going to drill down on Really a how to class on how to use software to make your real estate investing so dramatically, so dramatically, much easier. Okay. And we are going to have one of our clients who is a professor in San Francisco. And that is Michelle, who you heard on the show several episodes ago, Michelle will actually be teaching part of this class along with me, and she will be navigating you through. And you know, one of the great things with someone who’s actually a professor who’s actually trained to teach people things, unlike me, I just talk you know, very random tangent, or you know, all of that stuff that they really know how to structure a curriculum, so people can learn more easily and retain knowledge more easily. And so Michelle will be teaching part of this class along with me and then we will have Three or four of our local market specialists. They’re from different markets around the country, who will hopefully come in with their teams with their property management people. And it’ll be somewhat like a meet the Masters event, but we’re going to do another thing differently. And one of our wonderful clients and venture Alliance members, Elizabeth, who is a fantastic executive, for a large publicly traded company you’ve all heard of, and probably a lot of you are using right now. I won’t mention the name. Maybe she will on a future episode if she comes on. But Elizabeth suggested this and it’s a great idea. So thank you, Elizabeth. We appreciate it. And by the way, today happens to be Elizabeth birthday. So Happy birthday, Elizabeth. Well, actually the day of us recording that’s not the day your birthday. Yeah, absolutely. It’s gonna be about a week and a half after we record for this one. She’s suggestions she says Jason. Before you hold the next meet the Masters event. I want you to get all your local Market specialists there a day or two early, and I’m going to teach them presentation skills. And I thought, you know what, Elizabeth, that is a fair criticism, because they, some of them just, they’re great at what they do. They’re just not presenters. They’re just not public speakers. And so what we’re going to do is we’re going to do a whole different format, they’re not going to get up and do these long presentations. And some of them are good, and some just ain’t that great, frankly. But what we’re going to do is I’m going to put them on panels, and I’m going to interview them. And I’m going to ask them a bunch of questions that we’ve already determined in advance that you all want to hear the answers to, and then the audience is going to have a chance to ask them a lot of questions, as well. So we’re going to do a lot of panel discussions. I think it’s just going to be a much better format. I’m really excited about it, and it’ll be a good practice run. For our Meet the Masters event coming up in January. Okay. So that’s the event basically in a nutshell in Phoenix on September 10, and 11th. Now, before that one week before that, in beautiful Seattle, we are going to have our venture Alliance event. And that will be actually on Labor Day weekend. So that’s another venture Alliance event. I think that’s our maybe our sixth event. Now we’ve our first one was San Diego. Then we did Newport Rhode Island saw the mansions there we went to Dubai. And where else did we go? We did something else. How come I can’t remember Ethel island? This is my mind. I thought. Oh, thank you. Jekyll Island, Georgia. Yes, thank you very much. And so this one will be in Seattle. It’s gonna be a fantastic event. That’ll be Friday, September 2. We’ll start on Friday, September 2 for dinner. And then all day, Saturday and Sunday, September 3, and fourth, go to venture Alliance mastermind calm remember if you’re not sure about joining Winning the venture lions mastermind yet, if you want to really network with other investors and do creative deals and do what we call ground floor deals that offer you a chance to basically pay for your membership for a couple of years or at least one year. So you’ll have ultimately a free membership with some special deals we offer only to venture Alliance members. Based on that you can come as a guest, and it’s just a one time guest fee of $2,000. If you want to bring a spouse or significant other to that event or business partner, it’s $1,000 more so 3000 for the whole weekend. And again, this is a high level thing. These are first class events. Everything is paid for it’s just a phenomenal first class experience as it should be. This is the venture Alliance. This is a this is a high end deal. Okay, so nothing like the price of our regular events that are to a wider market. But just wanted to tell you venture Alliance on on Labor Day weekend, and then the following weekend will be our Phoenix event that we don’t know the name of yet. So that’s it. Sarah, thank you for joining me. Any other comments? Before we go?
Sara 40:13
No, I look forward to seeing everybody in the fall. And thank you so much for having me.
Jason Hartman 40:18
All right, happy investing everyone. Visit Jason Hartman calm. If you have any questions, you can contact us there. And one of our investment counselors will get in touch with you and help you with anything. You can also get me on voxer at Jay Hart 88, happy investing to all and we’ll talk to you on the next episode.
Announcer 40:37
I’ve never really thought of Jason as subversive, but I just found out that’s what Wall Street considers him to be. Really now How is that possible at all? Simple. Wall Street believes that real estate investors are dangerous to their schemes? Because the dirty truth about income property is that it actually works in real life. I know I mean, how many people do you know not Including insiders who created wealth with stocks, bonds and mutual funds. those options are for people who only want to pretend they’re getting ahead. Stocks and other non direct traded assets are a losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades. That’s because the corporate crooks running the stock and bond investing game will always see to it that they win. This means unless you’re one of them, you will not win. And unluckily for wall street. Jason has a unique ability to make the everyday person understand investing the way it should be. He shows them a world where anything less than a 26% annual return is disappointing. Yep. And that’s why Jason offers a one book set on creating wealth that comes with 20 digital download audios. He shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us we can pick local markets untouched by the economic downturn, exploited packaged commodities investing, and achieve exceptional returns safely and securely. I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government. And this set of advanced strategies for wealth creation is being offered for only $197. To get your creating wealth encyclopedia book one complete with over 20 hours of audio, go to Jason hartman.com forward slash store. If you want to be able to sit back and collect checks every month, just like a banker. Jason’s creating wealth encyclopedia series is for you.
Announcer 42:49
This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email media at Hartman media.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own. And the host is acting on behalf of Platinum properties, investor network, Inc. exclusively.
In this episode, Jason Hartman is joined by local market specialist Carrie to talk about the Cincinnati real estate market. She shares that the Cincinnati real estate market passed all 13 fundamentals of what is required to make a market viable as a rental market. Jason also explains the LTI ratio (Land to Improvement) ratio and plays an audio track of Closing the Gap – How to create a more inclusive global economy video.
Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Announcer 0:13
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:04
Hey, welcome listeners from around the world. And as I say around the world, we are traveling actually I’m here with Carrie and we are in the airport. Yes, we are in at CVG airport. And that is because we are just leaving our Cincinnati market tour our property tour and creating wealth seminar this weekend. And Carrie and I wrote back together Of course, Coco was over there looking so beautiful. And she was the star of the weekend. But we had some great properties do did we carry?
Carrie 1:34
We did we had some excellent properties for our investors this weekend.
Jason Hartman 1:38
Yeah, it was a great weekend. You know, we had I don’t know, I think we have about 32 people or so. And we looked at properties and I think we easily had people purchase over a dozen properties. Probably this weekend. We did the creative world seminar. And what I liked about this property tour is the way we did it, of course over two days as usual, and we started the creative world seminar Saturday morning. Then went to lunch and then toured properties. And then of course, we have this grand dinner together. Was that awesome?
Carrie 2:06
Oh right. That was amazing. It was just an outstanding dinner by our, our provider and everyone raved about it.
Jason Hartman 2:13
Our local market specialists, we went to their home, their 5300 square foot mansion. And it was just beautiful. Like we said, when we walked in, it was like being at a wedding reception. It was just gorgeous.
Carrie 2:25
Oh, the layout, there was about four or five dining room tables. Yeah, that was awesome. bartender was great.
Jason Hartman 2:32
That was a lot of fun. I think everybody really enjoyed meeting each other networking together and just having a good time together. So that was great. And then this morning, we did we finished the creating wealth seminar. And then we did another bus tour again, two days of the bus. And so there were a lot of good properties to look at. We looked at new properties, brand new properties, we looked at historic property. I just I couldn’t believe how beautiful some of those properties were and how nice some of those neighborhoods By the way, I want to give a shout out to just I mean, we, I hate to do this because every client I didn’t mention things well why didn’t you mention me? But I don’t have a list in front of me we’re standing at the airport ticket counter literally right now. Maybe we’ll take a picture of a stewardess and, and and we just grow also carry how many states? Do we just drive through?
Carrie 3:24
Yes, we actually we went through three different states on the road to the airport,
Jason Hartman 3:28
but that’s not as big a deal as it sounds. Because it’s only about an hour drive from this beautiful hotel. We stayed at the AC Marriott Hotel. And this is a part of the Marriott chain that they’re bringing over from Europe and it is gorgeous. In fact, the right word for that hotel is what is it carry sweating. Yeah, very sweaty. Yeah. What do you like about that hotel.
Carrie 3:51
I mean, everything from the decor. The staff was phenomenal.
Jason Hartman 3:56
It was brand new, brand new, modern, contemporary. It was just beautiful. Yeah, it was. So driving through the three states. Yeah, we drove through Ohio, Indiana and Kentucky today just to get to the airport. Right, right. It’s not that big a deal. That was about 45 minutes an hour, no big deal. Hey, so talk to us about some of the properties. Let the clients know about some of them. These properties will probably be sold by the time you hear this podcast episode, but you know, there’s some good stuff and we can find more inventory for you. And just give an example of a couple of them maybe,
Carrie 4:30
yeah, yeah, definitely. Um, we went through about three different cities, four or five different cities, Hamilton, and
Jason Hartman 4:39
Monroe
Carrie 4:40
roll the Liberty town and we saw some good before, during and after construction, some two bedroom, one bath, three bedroom, one and a half baths. We thought all ABC classes which really gave a good perspective to new ambassadors and seeing what kind of construction goes through each property. You know, they See the before they all, you know, Oh, it smells in here, look at the floors, but then they saw the after. Right. And they were just surprised. It was just amazing the transformation they can do. And yeah, and we had a lot of interest in the properties. So we also we hit up Middletown, I mean, we went to two or three more cities today. So it was a good I like the layout because, you know, like Jason said, you got to do the seminar in the morning, two in the afternoon, if you had to leave, you could leave, right, you know, you got to pick and choose which one you wanted to go to.
Jason Hartman 5:34
Right. Right. That was that was a fantastic arrangement. But it really our local market specialists here really up to the bar for our next property tour, unfortunately. So if you came to this one, and then you come to the next one, boy, we’re gonna have a tough time competing with that. That was it was very well done. Very well done. One of the things I wanted to refresh your memory on is what I call the lucky 13 and the lucky 13 are these fundamentals. That helps you pick a market. And I’ll just go through them real quick because we went through them, of course this weekend in the seminar, but they are number one cost of living cost of living, transportation, employment and job growth, education, the regulatory climate, the growth in the community, the rent control concept, the taxation, the regulatory climate, is it landlord friendly, you know, we want to invest in markets that are friendly to our causes landlords, even if it made any sense, and it doesn’t, it doesn’t even come close to making sense. But we wouldn’t do business in places where the there’s an anti landlord sentiment, that’s certainly not this market. So that’s great. Weather, crime, culture and arts, health and health care, funding, recreation, population density, and overall real estate market trends. And I tell you There are some great employers here. Some established stuff really nice. Yeah. Any any comments on that, Carrie?
Carrie 7:07
Yeah, we drove through quite a few communities that I mean, they have the Westchester hospital. p&g, GE, IKEA. I mean, they have some great, great employment opportunities for for renters here.
Jason Hartman 7:21
The other thing I noticed about this market is that this is a you know, it’s a conservative, stable market, where people they grew up here, they stay here, because their family is here. I just I just heard that and notice that over and over. And I always make it a point to always have a lot of conversations with the service people. If I’m in an Uber car or a Lyft car, I’m going to talk to them. You know, where are you from? Are you from here? I mean, the people don’t tell I have many people that question people at restaurants, and they all say oh yeah, I grew up here, and I’m staying here and my family’s here and and that’s that’s The kind of market this is, again, these are there are three basic types of real estate markets around the world, the linear cyclical and the hybrid. That is the hybrid of the two. And this is definitely a very linear market does not make the news, nothing too exciting. And people stay because of family. In fact, it even goes further than that in terms of the family dynamic, which is interesting, some of the homes or historical homes here, and they’re not your sort of typical rental. I mean, if you talk to any investor, right, Carrie, they’ll say what do they want? How many bedrooms and baths?
Carrie 8:33
Yeah, they want the three bedroom, two bath, you’re not gonna get it here.
Jason Hartman 8:37
Well, you won’t get it here. But it’s not. You can go out of the box here too, in the sense that a two bedroom one bath actually works pretty well as a record here. And why is that it’s because grandma used to live in that house, and they want to move into that house and have some affiliation or connection to that. So the roots go pretty deep in that that’s that’s amazing. To me,
Carrie 9:01
yeah, a lot of the neighborhoods we go through if we saw a two bedroom, one bath, you know, the house next to them has the same two bedroom, one bath. So it’s it’s based off of the the neighborhoods you’re in, in which districts you’re at to get the A, B and C, of course in class properties.
Jason Hartman 9:17
Yeah, definitely. One of the other things I just want to share is talk a little bit about the fantastic graph. In one of the rich dad books. Robert Kiyosaki is one of his books called who took my money. And this graph I showed it again, and it’s just startling to see it. It shows $10,000 invested in a typical single family home, versus $10,000 invested in the s&p 500 index over 10 years. The $10,000 in the s&p is worth just over $17,000. And that single family home that humble single family home, I say the most historically proven asset class in the entire world. It was worth $159,000. Now granted, you bought it with leverage. So there’s a loan to pay off. And 10 years later that loan balance might be I don’t know $83,000. But all things considered if it was just an interest only loan, so the loan balance stayed the same. The real estate, the single the humble single family home outperform the sophisticated glamorous s&p 500 index by 793%. Wow. 793%. Can you believe that now? Yeah, it’s amazing. It’s just amazing. And that’s because the real estate really income property, especially the special type of real estate and call income property is a multi dimensional asset class. So you get your return from a lot of places versus the stocks, either one dimension, just capital appreciation only. Or maybe It’s a dividend paying stock and you get it from dividends too.
Carrie 11:03
Yeah. And I like the the example you brought up about your house in California, you know, showing the difference between the land
Jason Hartman 11:11
right, the risk evaluate.
Carrie 11:13
They, I think a lot of investors, you know, really opened up their eyes. And I mean, it was just amazing the returns you can get just from, is it the land? Or is it the construction? Right,
Jason Hartman 11:23
right, like the improvement or the land that house sitting on the land or the land itself. And I talked before about this on the podcast, if you want to dive, take a deeper dive into this, just go to Jason Hartman, calm and type in Hartman, risk evaluator, and you can get a whole episode on this, but I’ll just touch on it now for a moment since Kerry mentioned it. And basically, what it talks about is is a phrase I coined called the LT ratio. Most real estate investors or even non investors that just buy their own home, have heard of the LTV ratio, the loan to value ratio. This one is the land to improvement ratio. And it is a very, very telling ratio, because it really helps us determine the amount of risk built into any investment. And when land value the L and the LTI on land is a big expensive part of the component. That investment becomes far more risky. When you have the land being low costs, I mean carry here, this land we looked at over the weekend as a component, you got to remember you’re buying two things. You’re not buying one thing when you say oh, I bought a property that you know people say that but what they really usually mean is they bought two things. They bought a house and then they bought a piece of land, and they bought them together is one thing, but it’s really two component parts. So the land here super cheap, right? Oh yes. And we love these kind of markets because the land is either free it’s literally free because you if you had to rebuild That house, you know that it would cost you more than you paid to buy that to just to build the house, not even including the land, but the land is so cheap, even if you buy the lot, it’s maybe only $15,000. So the equation, and the house sitting on the land might be 85,000. So that’d be $100,000. All in deal. And 85% would be improvement value, meaning commodities, right? What’s a house made? It’s made of lumber, and copper wire and petroleum products and all that kind of stuff. So it’s, it’s really you’re a commodities investor in a way. But you’re investing in commodities with three decade long fixed rate financing, and that financing you get, you don’t even have to pay the debt yourself. You get the tenants to pay for it. great deal. Hmm.
Carrie 13:49
Yeah, that was that was key point to that. Yeah, that’s really good.
Jason Hartman 13:52
So that house in California that Gary mentioned, that one had a very high land costs. 81% It’s literally the equation is flipped on its head at 1% land and 19% improvement on that $815,000 house I bought there so far, far more risky. Yeah, absolutely. Yeah, just a bit. Yeah, yeah. And if you want more details on that, we could discuss that for like 45 minutes, just go and find the podcast episode on that. There are a couple of them out there. Just go to Jason Hartman, calm and type Hartman, risk evaluator or LTI ratio or any of those terms and you’ll find it and it’ll be great. What are their highlights from the weekend? Do you want to share with listeners and then I want to get to a little video that I want to play for them that I think they all enjoy? Yeah, actually, I’m not gonna play the video, I’m gonna play the audio track of the video. So just to be clear, you’re not watching us right now. It’s audio only. But yeah,
Carrie 14:47
Well, what I liked about this tour is and all the other tours, you know, investors come together and they get to hear each other’s stories, too. Yeah. So I mean, during the lunch and breaks, you know, they’re they’re feeding off of each other and they’re experiences and they get the real live you know, picture of what goes on in the gods the bad and the ugly. Yep. So that’s always a bonus to come to these events and see that and meet people and network with them and know you’re not alone.
Jason Hartman 15:13
Right? know you’re not alone and know that we are for real. Right? Okay, that’s the other thing. I mean, there are so many people out there who are you know, they’re doing a podcast, they’re doing internet marketing or online and you hear their stuff and you know, they’ve got educational products or whatever, but you never really meet them. And you never really meet their clients to see that they actually have real clients of course, they’ve always got a few fake testimonials, their, their brother, their sister, actor, whatever, you know, they there are websites, you can buy these fake testimonials on I’ve seen them out there and fake reviews and stuff like that. But you can you can meet our clients in the flesh. We have several events per year. Come to the next one, make it a point to come to a live event. Everybody who comes The evaluations we get are extremely positive. The only time I get a negative evaluation Carrie, can you guess what that might be? Talking about politics. That’s when occasionally I’ll get that leftist communist in the audience. Who, who says, you know, you should just stick to real estate harp and shut up about this stuff. But, you know, sometimes I just get off on a tangent, you know, well,
Carrie 16:32
I don’t think Coco is too happy with you calling her a democrat either.
Jason Hartman 16:35
Coco is a total Democrat. You’re getting that she sleeps all day. She doesn’t have a job. She gets free health care. She gets free food. I mean, free travel, actually, you know, she’s going on the plane with us now. Coco gets everything free. She is a total Bernie Sanders supporter completely. I mean, that’s, that’s who she wants to be president. She doesn’t like Hillary too much because she knows Hillary is a crock but You know, Sanders, well meaning guy. At least I can say that for him, even though he lives in fantasy land. Oh, gosh, I don’t know. Okay, well, maybe we should put more ahead on this stuff because now I’m getting some bad reviews right now. Oh gosh,
Jason Hartman 17:14
well, hey, listen, um, I want to play a video for you that I think you’ll find very interesting as it relates to the future and what it means to real estate investors and the economy overall. time permitting me I’ll even plug two of them in here. There’s a funny one from the weekend. I want to play from you for you too. So let’s do that. Carrie, go to Jason Hartman comm check out some of the video of our events and come to our next event. We haven’t announced it yet. But any thoughts or ideas on where you think our next tour might be? We got to survey all our investment counselors and our clients a little bit and do that, huh? Yeah. Do you have a you have a preference, Carrie?
Carrie 17:53
You know, we have a few new markets that would be interesting for us to tour and you know, the Quad Cities Yeah, Port Richey. Yeah, we can do that there’s a few options.
Jason Hartman 18:04
We’ve been asked if we would bring in tour to Port Richey. So we already got that. We’ve been hit up for that one. So we might do it. Who knows? We’ll see. And stay tuned for more information on that. Just keep checking on the podcast. And we’ll tell you about that. We got aboard the plane soon. Yeah, so let’s get over to our gate. 818 I think right here in the airport. Yeah, they’re coming to meet us. Yeah, we’ll be there. And let’s just listen to an interesting audio track from a video I want to share with you. Here it is.
Excerpt from audio track 18:34
Club billionaire Jeff Green has been sounding the alarm for years about the destruction of the American middle class today. He put his money where his mouth is having some of the greatest minds in from academia, the economics world come here to Palm Beach to his conference closing the gap, how to create a more inclusive global economy. Jeff, thanks for joining us. Hello, Robert. This is kind of a new model for a conference where you’re basically spending your own money to address As a single issue, why is it so important?
Excerpt from audio track 19:03
Well, the biggest issue for me for years now has been that the exponential growth of technology and the global legalization of wages has destroyed millions and millions of jobs. And what I have learned preparing for this conference, is that what globalization did to the blue collar worker in manufacturing over a 30 or 40 years, artificial intelligence, machine learning big data, robotics, I believe will do to the white collar workforce in the next five to 10 years. So this is a national emergency, and I’m going to address it myself if no one else will.
Excerpt from audio track 19:33
You’ve often told the story you actually worked as a busboy at the breakers down the street. Now you live in 100 million dollar mansion. This is your hotel, somebody would ask, you have been so successful. Why do you think that system is broken in America? You’re proof that it can work?
Excerpt from audio track 19:48
Well, that’s exactly it. I mean, I have proof that I can work but the system we have today isn’t the system in which I grew up. I grew up in western Massachusetts in the 1960s Robert, it was a working class community. You know, I went to the same public schools or the bricklayers kids and the pediatricians, kids in the doctor in the you know in the Laureus kids. And we all got good solid education’s. There were opportunities for people when they get out to get jobs in factories, good paying jobs, and all my my friends whose parents were bricklayers, and were factory workers, they lived in homes that those families out today, people get out of high school. I have friends whose kids graduate top law schools and can’t get a job for a year or two. So you know, we have to do something about it because the job picture is getting worse and worse.
Excerpt from audio track 20:31
Jeff, let me do Billy if I may. And thanks for joining us here. I just want you to listen to something that Ken moelis told us the other day about the changes he sees in technology that while disruptive or necessarily threatening to our society, take a quick lesson.
Excerpt from audio track 20:46
In our world right now, you have so much technology driving price, transparency, pricing, power, efficiency. These are great things I mean, what Amazon is doing if you’re a retailer, you better take your profit down. Give the consumer an awfully good deal or Amazon’s going to is going to replace you.
Excerpt from audio track 21:05
So in other words, Jeff, a lot of the changes that we’re seeing, even if they create, you know, people in law school who aren’t getting the dream job that they wanted are fundamentally for the for the for the good. He would argue what would you say?
Excerpt from audio track 21:18
Now, it’s a disaster, I mean, commodity, the way prices going to work, we’re going to all have such perfect information. Think about when you buy an airline ticket today, you can go on one of the websites like kayak or Expedia, you’ll know in less than 60 seconds what the very best fairest, that’s going to be how you’re going to buy everything, margins are going to get squeezed, retailers are going to go out of business, we’re going to be you’re going to be able to buy every product not only from here, from everywhere in the country, you know, with with translation, talk content, technology, it’s not going to be long before you’ll be able to print a price every product from every country in the world. Yeah, what’s that gonna do to American profitability?
Excerpt from audio track 21:50
Listen, I hear your point. But Amazon’s worth a pretty penny. Let me just bring out the red pill on here as well. She has a question.
Excerpt from audio track 21:57
Jeff, thanks for joining us. So you have right The question of robots stealing our jobs, of course, which is a concern that has been around for centuries, arguably millennia. I mean, I think Socrates said that one day, some sort of automated system would replace the the weaver. You know, we had Luddites, who were destroying threshers, destroying looms and every time this concern has been raised, mankind has been able to adapt. It was painful initially, but there there wasn’t ability to adapt, we transition from an agrarian society to an industrial society, and so on. Why is today any different? I mean, why why the doomsaying today, given what we’ve seen historically?
Excerpt from audio track 22:40
Well, I mean, look, I mean, you could talk about Amazon. You know, look, I mean, if you want to talk about jobs, just look at the look at the Amazon distribution center. The robots are stocking the shelves. Go take a view to take a look at the video of a Tesla factory. The welders are robots. This is really happening. This is not the Jetsons anymore. It’s not some futuristic story. This is happening today. Let me tell you the other problem is globalization.
Excerpt from audio track 23:03
But it’s, well, you know what the problem now is adapted, you know?
Excerpt from audio track 23:07
Well, it was different. First of all, if we had a relatively closed economy and I was a kid, you know, basically, the economy got good. Everyone bought a whirlpool bad washing machine and then a whirlpool workers went back to work. Now, if you want to watch me saying, you know what that was going to be made somewhere else, because what happens as soon as late wages get high today, they their labor gets replaced, either with a technology solution or labor from from a cheaper country job,
Excerpt from audio track 23:30
I want to ask you about solutions. We all know that this is a problem. The degree of the problem can be debated. But what is one hard concrete solution that has either come from this conference or will come from this conference that you hope can be implemented?
Excerpt from audio track 23:44
Well, that’s a good question. I mean, I have been here all day with some brilliant minds, Robert, and I can say that, you know, I mean, Bob, right. She was the former labor secretary talks about some kind of guaranteed minimum income. I think that a lot of the talk about lifelong education people, right. we’re educating our kids, not In a vocation, which is just anecdotally being talked about as a welder shortage or whatever, but teaching our kids that they have may have 20 jobs in their lifetimes, and they have to learn how to adapt themselves. So we get to get our education system geared. We have retraining programs, we can’t just say that some people, you know, they work in a job, it’s not their fault that that industry gets automated and they lose the job. We have to have a safety net to hold them over until the end, then we have to retrain them and get those that want to work a chance to have another job again.
Excerpt from audio track 24:29
Right. Well, Jeff, thanks for this conference. Bring it together everyone, by the way, from Tony Blair to Mike Tyson talking about the economy. So some interesting ideas to bounce around here. Whether we solve it or not, is the open question Kelly back over to you.
Announcer 24:44
I’ve never really thought of Jason as subversive, but I just found out that’s what Wall Street considers him to be. Really now How is that possible at all? Simple. Wall Street believes that real estate investors are dangerous to their schemes. Because the dirty truth about income property is that it actually works in real life. I know. I mean, how many people do you know not including insiders who created wealth with stocks, bonds and mutual funds? those options are for people who only want to pretend they’re getting ahead. Stocks and other non direct traded assets are a losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades.
Announcer 25:27
That’s because the corporate crooks running the stock and bond investing game will always see to it that they win. This means unless you’re one of them, you will not win. And unluckily for wall street. Jason has a unique ability to make the everyday person understand investing the way it should be. He shows them a world where anything less than a 26% annual return is disappointing. Yep. And that’s why Jason offers a one book set on creating wealth that comes with 20 digital download audios he shows us We can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us. We can pick local markets, untouched by the economic downturn, exploited packaged commodities investing, and achieve exceptional returns safely and securely. I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government. And this set of advanced strategies for wealth creation is being offered for only $197. To get your creating wealth encyclopedia book one complete with over 20 hours of audio, go to Jason hartman.com forward slash store. If you want to be able to sit back and collect checks every month, just like a banker. Jason’s creating wealth encyclopedia series is for you.
This show is produced by the Hartman media company All rights reserved For distribution or publication rights and media interviews, please visit www dot Hartman media.com or email media at Hartman media.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own and the host is acting on behalf of Platinum properties, investor network, Inc. exclusively.
In this client case study, Jason Hartman talks to Michelle Hawkins, a client who has attended a Meet the Masters live event and the most recent Creating Wealth Seminar and Property Tour in Cincinnati, Ohio. Michelle shares what has led her to invest in income property and also gives investing advice. They discuss inflation, real interest, and tax rates.
Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Announcer 0:12
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution for Real estate investors.
Jason Hartman 1:03
Hey listeners, I just want to apologize for the audio quality on the first part of this show this episode. It is only the first part for just a few minutes during my monologue portion. And then when we have our guests, the sound quality is improved dramatically. So please bear with us. I apologize. We will try to make sure it does not happen again. Welcome listeners from around the world in 164 countries. This is your host Jason Hartman episode number 686 686. Well, I woke to the tragic news this morning, Sunday morning, as many of us did, to the terrorist attack in Orlando, Florida. A 29 year old Islamic radical went in and killed a bunch of people. He was targeted. gays apparently, these are the early stories coming out. We’ll see how this is corrected. We’ll see if this guy had contact with the FBI. We’ll see what his Afghanis ties were apparently he was born in the US, Afghani parents. And maybe most interestingly of all, will we see any coverage about him being on antidepressant pharmaceutical drugs on benzodiazepine type drugs? These mass shooters? That’s the thing they have in common. It’s it’s always the prescription drugs. Yeah, you don’t see this stuff covered. Because look at all those commercials on TV. For those pharmaceutical companies. Yes, I know. Very little coverage. Only the alternative media covers this kind of stuff. And then everybody doubts it because they say, Well, you know, you can’t run away. On what TMZ reported, I don’t know, maybe it’s a lot more reliable than CNN. Maybe someone knows. Did Donald Trump by CNN, either. Here’s the reason I asked. He that’s all they talk about Trump. I mean, it’s mind boggling. You know, I don’t have television. As you may know, I told you that I canceled my television a few years ago. I just have internet access in my house.
And so I watched streaming services and surf around on the computer. But when I go to a hotel, and I’m on my way to a hotel now because I’m on my way to be driven by my self driving car to be driven to San Diego, escape the heat a little bit and that’s a game changer. You know, like I’ve talked about because here I am. It’s going to be 102 degrees in Scottsdale, Arizona today. And it’s going to be 70 degrees in La Jolla, California today. Where are you? Going, and my car will drive me there almost effortlessly. And imagine when that car is completely autonomous, right? I could literally get into the car and go to sleep and go to the much more expensive real estate market that I don’t have to pay to live in. And the car will stop along the way and charge itself or fuel itself automatically. And I don’t even have to wake up the whole time I can be driven there. Five and a half hours, six hour drive. I’ll just wake up in San Diego to a much nicer planet.
Now listen, Arizona eight months of the year, has the best climate on the planet. If you ask me. I love it here. Eight months of the year. It’s spectacular. Literally spectacular. But of course in the summer, it’s tough. It’s It’s hot, but it’s a dry heat. So that self driving car thing will change the game. But I tell you it Back off my tangent. Anytime I go to a hotel, and I turn on the communist news network or the clinton News Network, or the crisis News Network, you know, CNN, CNN has so little credibility anymore. It’s mind boggling, but not with a large percentage of the population. They still do. So I turn it on, and all they are talking about is Trump this Trump that Trump everything else. Donald Trump, Donald Trump does that and the other thing, some stupid thing he said. Did he buy that state? Did he buy cnn did Ted Turner sell cnn to Donald Trump? You just gotta wonder. You just gotta wonder. But yeah, tragedy, another terrorist attack on US soil. And is terrible as this is. I bet there will be a lot more. So be ready. You don’t see this stuff happen in Texas. I wonder if this is ever going to happen to you Texas, is someone going to go into a nightclub in Texas and kill a bunch of people, when all those Texans would just pull out their side arms, because a bunch of them will have them with them and shoot back. He’ll get off a round or two, and then he’ll be dead. So, look, I don’t want to live in the wild west. I live in Arizona, I can certainly carry a gun around anytime I want here. It’s super easy. You know, no permit needed, but I don’t. Or at least I don’t often say that. Just in case you’re you might wonder. But yeah, you know, it’s, it’s tragic. They always pick the places where people aren’t armed. You look at Europe, nobody’s armed. So that’s a prime target. That’s where most of this this kind of stuff happens. It’s really sad. Our world especially the left, the left is the most guilty of this. The folks on the left they are Attack the symptom and never attack the cause. Attack the cause, not the symptom. That’s what you have to really look at. What is the cause? Is it a radical religious ideology? Is it pharmaceutical drugs? Is it immigration control that we need to talk about? I don’t know. You know, what is it? I’d love to hear back from you. In fact, if you want to have an intelligent discussion in you’re an expert on these subjects in some way, come on the show. I’d love to interview Yeah. It’d be interesting to talk about. Okay, so this is a real estate investing show, right? Yeah, it is. But I’m pretty upset about this, as I’m sure many of you are.
So I just thought it was worth a comment and of course, worth some prayers, but much more than that. It’s worth really doing something about on a more political level. So We have to talk about this kind of stuff. But yeah, so let’s talk about a investor journey. Let’s hear from one of our great clients today, who has recently started her journey to build a great real estate portfolio realizing that the pension system will not solve the problem, again, more symptom and cause discussion. These pensions are totally overrated. They’re going to be debased potentially through inflation. It’s a huge concern. So you’ve got to plan and that and create your own security in the world as all any of us can do nowadays. I remember Earl Nightingale talking years ago, about the laid off steel workers in the Rust Belt areas. And he would say, or the auto workers in the Detroit area, you know, he he would You know, someone would stick a microphone and a camera in front of one of these people laid off because the plant shut down or they laid off a bunch of workers. Well, I’ve been doing this 20 years I don’t know anything else. And romaine kills comment would, you could learn how to do heart surgery in your spare time in 20 years. Okay? We have got to take and make our day job, simply the stepping stone to our ultimate goal of building a very nice investment real estate portfolio. I have graduated, if you will, in my own portfolio into some bigger things which are kind of cool and interesting, but they are much more complicated. I still love the humble single family home I just bought a couple more of those myself. I’m going to be buying more as I go down my own path of diversifying I freely admitted one of the mistakes I’ve made is that I’ve over diversified so I’m trying to Be a little less diversified. If I can get myself down to like seven markets, five would be even better, but seven would be great. Lucky Seven, seven different real estate markets between my apartment complex holdings mobile home park, single family home holdings, I would be super happy about that. Again, your mind can remember three to five things really easily. You can keep track of that in your head and really know what’s going on with your portfolio. So don’t over diversify, but do be diversified. Remember, part of the 10 commandments, and then the next 10 commandments. And by the way, we’re going to be playing on some future episodes here. Some recent live recordings where I’ve updated some of this stuff, and I think you’ll enjoy that. I know you’ve told me you’ve enjoyed the past recordings but we’ve, we update this stuff. When we do these live events. There’s a new spin some new details new, distinct on it. We’re also going to analyze a an interesting duplex. With our guests here today, Adele bola Island duplex that’s a Newport Beach, California. See if you like that deal. Let me tell you about some of the other great shows we’ve got coming up. Gosh, we got so many in the can now for a while there we were a little short on inventory. We’re going to be talking about retirement risk and how to plan around uncertainty for a successful retirement. That’ll be with Jamie Hopkins.
We’re going to talk about a heist in the Federal Reserve with Matthew Quirk. Kevin mania is going to be here from Newsweek talking about how to play bigger, how pirates, dreamers and innovators create and dominate markets. We’re going to talk about we got a little more another interview on the Chinese market talking about breaking in ground and Chinese investment in us real estate. Arthur Margolin from Rosen Consulting Group in the Asia Society. We’ve got john our lot coming back which by the way, you No, I opened up talking about the gun control silliness. It really is. It’s just it just doesn’t make intellectual sense. And intellectual honesty is in short supply today, but we’re not going to talk about that it just so happens the author of that great book, more guns less crime, john r lot will be with us to talk about economics, and how do we regain control of our future. He writes for the American Enterprise Institute and Fox News. We’ve got congressman Dr. Paul Brown with us talk about economics and the Constitution, flat tax job growth and more. Yeah, we got some good stuff coming up. So really, some interesting interesting shows a lot more than that. So anyway, let’s get to our guests.
Let’s talk to one of our clients. Michelle, who recently attended our Cincinnati, Ohio market, Cincinnati sort of date meeting between market tour and creating wealth seminar and she’s got some good comments for you on that. Visit Hartman education COMM And check out some of our great educational products there that go into a lot of this stuff in more structured, detailed manner. That’s at Hartman education, COMM And of course properties at Jason hartman.com. And we will be announcing another event soon. We’re working on that now. So stay tuned for that as well on future episodes, and let’s get to our guest and talk to Michelle.
Hey, I wanted to welcome one of our clients to the show, and she’s a newer client, but a longtime listener to the podcast, and that is Michelle from the San Francisco Bay Area. Michelle, how are you?
Michelle Hawkins 13:36
I’m great, Jason, how are you?
Jason Hartman 13:38
Good. Thanks for joining us and you are a musician. So you’ve got a very nice microphone and you sound great. Thank you. This is a totally professional interview here, folks. I’m sure I sound terrible compared to Michelle. So you know, unfortunately, that’s not supposed to I think it’s supposed to be the other way around. But you joined us for our last meet the Masters event last January. And then for our Ohio property tour and creating wealth seminar recently, how’d you like it?
Michelle Hawkins 14:06
I loved it. And I would absolutely recommend it to anyone who’s out there listening. If you’re on the fence, and you’re, you’re wondering if this real estate investing is for real, I just would recommend that you go to an event because you’ll meet people. And you’ll, you’ll see that there are real people who are actually doing it and that it’s not a scam. It’s actually a real thing. And it works. And, and there’s a lot of people out there doing it and doing very well.
Jason Hartman 14:37
Yeah, thanks for mentioning that. I really want to encourage listeners to come to events, at least come to one so you’ll get to meet us and know what we’re all about and meet our clients. It would be much easier Michelle and everybody listening for us to just be sort of this online business right? Where we didn’t do live events. Live Events are lost. splitter for us they don’t they’re not profitable by the time you make it all happen and promote it and so forth. But they are profitable for us in the sense that once people come to events and meet other more than more important than meeting me or our team of investment counselors and our staff whoever happens to be at that event, it’s meeting the actual people the other listeners to the show the other clients hearing their stories and the good and the bad and the ugly it’s not all roses by any means. And I don’t know Michelle either they are those the only two events Ubuntu masters and then this last Ohio property tour.
Michelle Hawkins 15:40
Yes, yeah, Masters was my first event.
Jason Hartman 15:42
Did you hear any horror stories?
Michelle Hawkins 15:44
Not at masters No, but, but I did meet a lot of really wonderful and interesting people and got to hear you know, where they were in their investment journey. And it just really gave me confidence to actually pull the trigger.
Michelle Hawkins 16:01
Because, you know, it’s scary,
Jason Hartman 16:03
you know. And you’re you’re sort of the typical kind of investor that we have, I’d say, I’d say the largest section of our clients are people that are in your similar situation. They’ve got a home, it’s appreciated. They’ve got a lot of equity in it as Do you. It’s that old concept. We used to have this ad It was a great looking at, I wish I could find the image we hired an illustrator to make it and everything in it. It was when really the vast majority of our clients were from California, because that’s, that’s where I started out. It said, turn your castle, meaning your home into a kingdom. And it had and the idea was harvest the equity from your highly appreciated home or your paid down mortgage that you’ve been sitting on for years, either one and diversify it around the country into these much more sensible, stable linear markets. So you have the best of both worlds. You still control that asset, you still own it, you know, just refi that money out and buy some other income properties that makes sense that actually work. You wanted to talk about that, and pensions and so forth. And I love how you say, because as we were off air, before we started, you talked about this, this whole idea that is so ingrained in society. And of course, it’s ingrained, because Wall Street has lobbied Congress, and they’ve had laws passed. I don’t know how much of they were behind irisa, but probably a lot back in the 70s. And they’ve been promoting these ideas for four decades of that we’ve got to sock all our money away in the stock market, rather than use it today. And I think you could use it in a much better fashion, and wait till you’re 59 and a half or 70. To enjoy it. What did you say about that? share that with the listeners, I thought that was a really good thought.
Michelle Hawkins 17:57
Well, it’s just this idea that your hard earned money doesn’t really belong to you. And that the government’s basically saying, you know, oh, we’ll let you put your money away so that you can have it when you’re 70. Right, rather than, like, as if that money doesn’t belong to you in the first place that you didn’t earn it. Right? So why should you be able to enjoy it during the prime of your life? Right when you have, you know, the energy and vitality to travel the world or do whatever you want to do. But instead, they’re saying no, you know, you should really just stick that away where you can’t touch it without great penalties. And, and we’ll just let you have some of it when you’re 70.
Jason Hartman 18:37
But isn’t that a good idea, though? I’ll just play devil’s advocate with you for a moment. The government encourages people to save money for their future rather than the government taking more in taxes and then promising to give it back to us later when we don’t have an income right or what I mean, where’s the Where do you come down on that?
Michelle Hawkins 18:58
Well, That’s sort of nanny state ism, right? It’s the idea that you are not intelligent enough to do something good with your money. Or, you know, if you if you want to do something more aggressive or something more clever with your money, you know that they don’t encourage that, right? They just encourage you to do the simple, safe, boring, and actually, really, not really not effective thing with your money. I mean, the reason why I’m here, Jason is because I did the math. You know, you know, when I first when I finally got this tenure track position, and I was in a place where I could really step back and look at a bigger financial picture of my life. I was curious, you know, where am I going to be at retirement? And I looked at my pension, and I did a bunch of projections. And when you take into account inflation, it’s not pretty, it’s not what people think it’s going to be. And then I looked at, you know, socking away the max is Look, you know, four, three B and in a, an IRA Roth or, or normal. And you add all that up you, you know, say maybe the stock market is going to do a percent. And then you take into account inflation and the fact that that money will be taxed at income as
Jason Hartman 20:18
income, right when you withdraw it and, and, and look, nobody listening would be dumb enough to think that tax rates will be lower. Because Because Michelle, here’s the thing, like, the way I heard that pitch to me many years ago is, is that look, when you retire, you’re going to be in a lower tax bracket. And I’m thinking what the that on its face is such a messed up idea. The idea is that I’m going to retire and be poorer than I am now. I hope I’m going to be a lot richer than I am today when I retire. Yeah, so just that part of it first is wrong. But also the fact that the government is so dysfunctional, and so broke The idea that tax rates will actually be lower. Yeah. You know, based under I mean, the thing they’re saying is that under the current tax scheme, that, yes, if you’re making a lot of money today in the prime of your career, and you’re working hard, and you’re in their peak earning years, and then when you retire, you live more modestly. Which who wants that idea? Right? But whatever. We’ll take that on its face and let it go. And your income will be lower. So your tax bracket will be lower? Well, yeah. But first of all, the tax scheme doesn’t it’s not a it’s a dynamic thing. And as the government gets more broke, they tax more. So that’s the first problem with that theory. And then the second problem is who wants to be poor in the future?
Michelle Hawkins 21:47
Exactly.
Jason Hartman 21:48
Crazy. It makes no sense. Yeah. So if you do, let’s talk about that math you did for for a minute. So if the s&p does 8%, for example,
Michelle Hawkins 21:58
I don’t know. Do you think it’s gonna do a percent and the foreseeable it’s so overvalued, currently slated due to random printing? I don’t know.
Jason Hartman 22:07
Right, of course, but that that’s a complex discussion to have. But if we say if we say someone listening is 30 years old right now, and for the next three decades, do you think the s&p will average 8%? God? I don’t know. But let’s just give them that. Let’s say it does average 8%. Okay, sure. And let’s say that real, I’m not talking about fake manipulated inflation rates, but real inflation over that same course of time. Okay. Now, you know, Michelle, that when I presented the inflation induced death destruction concept, last weekend in Ohio, at the creating wealth seminar, inflation from 1972 to 2001, in that 30 year mortgage period, any one of the millions of people that had three decades long mortgages at fixed rates back then inflation averaged 5.3%. In official numbers, this is not this is what the government told us it was, which is always they’re estimating lower. Okay, the CPI said 5.3%. And I think you can assume that whatever the official number is, you can conservatively add 50% to that. Okay, no, argue with me if you want maybe, you know, some people would say you can make a double that if the government said it was 5.3, on average, that it was 10.6. I’m not going that far.
Michelle Hawkins 23:36
The fact that they don’t, they don’t take into account energy, which everyone uses and has to use, you don’t have a choice, right? And food. Right? You know, all you have to do is be the person who drives and go shopping in your household. And you know that it’s all a lie,
Jason Hartman 23:52
right? But the distinction is though that’s in the core rate of inflation, that’s not the CPI. Okay, so in the CPI, they do count that stuff. But they
Michelle Hawkins 24:00
manipulate the hell out. Yeah, they don’t it’s not real.
Jason Hartman 24:03
It’s not real. Of course, it’s not real. We know that for sure. You know, any sophisticated person knows the government is lying about they’re manipulating the inflation rate massively. So let’s just say that over the next three decades, the s&p does 8% in real inflation is seven and a half percent. Okay, seven and a half. We’re, you know, assume it’s slower, say it’s 5%.
Michelle Hawkins 24:30
I did 4% and was still horrified right? Well, yeah.
Jason Hartman 24:33
Okay. And did you do 8%? On the s&p?
Michelle Hawkins 24:35
Yes. Okay. And I’ve just plugged it into some, you know, there’s some great online calculators you can find, yeah, so I just plugged in all these different scenarios and was shocked.
Jason Hartman 24:45
Okay, so here’s why Michelle is shocked. I think, Okay, I’m gonna just tell me if I’m wrong. You were shocked because it’s 4% inflation and 8% return on your funds in the s&p. Then you’re going to get taxed either. If you convert that into a Roth, you’re going to get taxed immediately or later, you’re going to get taxed when you start to withdraw, and the tax rate will probably be much higher. But look, you live in my former home state, the Socialist Republic of California, and I love what you say you say, it’s lonely being a libertarian in San Francisco.
Michelle Hawkins 25:22
It really is. And it’s, it’s shocking, because you would think, you know, with all the supposedly free thinkers that, you know, these ideas would have more traction out here, but well, you know,
Michelle Hawkins 25:34
it is what it is. Yeah. Right.
Jason Hartman 25:35
That’s, that’s, that’s very true. So your, your tax rate is probably going to be somewhere in the neighborhood of 40 to 45% when you include this, right, yeah. And then there are a bunch of other taxes we won’t even talk about. So you’re gonna pay, just just route it. So you’re going to pay 40% of that. You’re hardly making any gains. You’re not making any Yeah, yeah, you just treading water, right? You you you have inflation at 4% you have return at 8%. And and then you pay 40% in taxes. When you take withdrawals and distributions later. It the whole thing does it just doesn’t work. You’re absolutely right. It doesn’t work. So, so that’s what attracted you to real estate investing, right?
Michelle Hawkins 26:24
Well, when I realized that I just, you know, said, well, there, there just has to be another solution. So, I just, you know, I literally went to the library and checked out every book I could find on investing, you know, stocks and real estate and I, I just looked up every podcast I could find and just started learning, learning learning. And I stumbled across yours and just kept coming back to it over and over again. And really started thinking about it and learning about it and it’s, it’s the only way
Jason Hartman 26:55
you know, what books did you look at and read and any recommendations good, bad, ugly. Big nerds like to hear about that if you remember which ones,
Michelle Hawkins 27:03
the ones that I ended up liking the best.
Jason Hartman 27:05
Yeah, the ones that you didn’t like or you do.
Michelle Hawkins 27:08
You know, I started out, you know, looking at stocks. So of course I, you know, there’s do the Intelligent Investor, right famous, famous one that supposedly it’s Warren Buffett’s book, or the one that influenced him value investing. So I was trying to figure out, you know, what’s all this value investing? And I read Tom Vogel or vocal, what’s the vanguard guy Bogle? I think Google the little the little book of investing group. And basically, the more I learned about it, the more I learned that you cannot beat the index, right? That’s sort of the common wisdom now
Jason Hartman 27:42
that’s the random walk down. Very famous book. Yeah.
Michelle Hawkins 27:46
And you know, you can’t you can’t beat the index. So that’s the best you can do is find a no load index fund.
Jason Hartman 27:52
Right, Vanguard. If you’re gonna be in stocks, I don’t totally disagree with that. I just thinking you’re in the wrong thing if you’re in stocks, so. But conceptually, I think that’s what’s hilarious about all these people spinning their wheels on Wall Street. They all think they’re gonna beat the index. They’re gonna beat the high frequency traders. They’re gonna beat the professionals that live, eat and breathe this stuff. It’s all they do. It’s their whole life, and they can’t beat the indexes. It’s it’s like, it’s hilarious.
Michelle Hawkins 28:26
The hedge fund managers, that’s
Michelle Hawkins 28:28
what I’m saying, Yeah. Hey,
Michelle Hawkins 28:30
Warren Buffett’s gonna win his bet.
Jason Hartman 28:32
That’s what I’m saying. It’s hilarious that people actually can talk about this stuff with a straight face. It’s just mind boggling to me. Yeah. So you came to the conclusion after all of that stuff that that real estate was the thing do you have a second best favor for real estate? Oh, gosh, after real estate,
Michelle Hawkins 28:54
Oh, you mean for investing or for books?
Jason Hartman 28:56
for investing or books, either one. I was talking about investing when I The question.
Michelle Hawkins 29:01
I mean, of course, there’s Rich Dad Poor Dad is the classic read that many years ago. And then there’s just, there’s so many on real estate investing. And I am drawing a blank. William William Nickerson. Oh that’s great.
Jason Hartman 29:15
That’s a classical stuff. Bill Nickerson, William Nickerson, he I think he started writing books about it in the 50s. Oh, no, he was before then. Yeah, it was like late 50s. Or at least his story started in the late 50s. I one or the other. It’s a great story. He’s got one I think is really famous one is called how I turned $1,000 into a million dollars in my spare time in real estate, some crazy things. Yes. And my guy was legit, you know, he did the real thing. But keep in mind that he was doing that in a different environment. There was a lot of inflation that he benefited from during some periods of his investing career. So that was a that was part of it. But yeah, his stuffs great. It’s just you have to add a zero to everything. That’s all. I remember when I was hearing a synopsis on an on an audio book of his story, and the narrator said, and he bought his first property for, wait for it. And it was like $7,000. And it was in Redondo Beach. I think Elena. I’m kidding. I don’t know where it was. But it was in some high end area, sort of. And it’s funny story. Bill Nickerson is great. He’s he’s, he was one of the he was really one of the first I think, to contrast that you want to hear about an amazing deal. Michelle, tell me what you think of this deal. Now that you are an educated investor, I got one in my former hometown, Orange County, California. This is on this is in this really charming area called Balboa Island. Okay. Okay. You might be looking at this because I showed you where it was in that Facebook group. This problem is a duplex on Balboa Island. I wonder what the listeners are gonna think of this deal. You know, if you’re interested, contact us, we can we can help you buy this property, okay because you know we are a California licensed company. Okay. So So here you go, you’re ready the price? Well, before I tell you the price, let me tell you some other stuff about it. It’s two units. Okay. So the total size of the building for both units is 40 579 square feet. And the price per day was built back in 1976, two stories. So 100% occupied, both sides are occupied, and the price per unit. This will give away the overall price obviously, is $1,750,000 per unit. So it’s three and a half million for the duplex and the gross rent multiplier. We really never talked about this one as a metric, but it’s so mind boggling that I I thought I’d share it. It’s 54.01 is the gross rent multiplier. And that gives you a cap rate of, like they said in the William Nickerson book, wait for it. Point, five 6% cap rate. point five, six. Now all of you listeners who understand this or you’ve gone to Jason hartman.com and click on Properties and looked at the performance, you will see cap rates anywhere from probably seven to 12% in that range, okay. And most of them will be around eight, or 9%. Yeah, something in there. Right. So this cap rate is point. It’s not even it doesn’t even have one. It’s less than one. Okay, it’s point six, five or five 6%. I cannot believe how terrible the steel
Michelle Hawkins 32:50
but it’s in California.
Jason Hartman 32:51
Oh, yeah, that’s right. That must be golden land. Oh, yes. Yes. Magical golden. Love it. Yeah. So here Here’s the the the income on this property is $64,800 and the operating expenses are $43,427 leaving in and oh I have a net operating income up look if you invest three and a half million dollars, this is going to be your noi your net operating income. It’s going to be 19,430 bucks.
Michelle Hawkins 33:31
Sign me up, Jason.
Jason Hartman 33:33
Yeah, but here’s the funny thing. Lots of people will buy this kind of thing all day long. I mean, maybe not quite as bad as this one. But lots of beachfront duplexes and, and this isn’t even on the beach front. By the way, I know what street This is on. I’m very familiar with it. A lot of these you know beach area properties sell for these reduced Oculus, they’re just terrible deals. And look, you live in the San Francisco Bay Area. I mean, you got this kind of stuff all over the place. In fact, if we if we did the same type of analysis on the house in which you live, because you told me about it, I bet it’s not too far from this one, you know, in terms of the cost by versus the income it would produce, you know? Yeah, it’s amazing. And all these people that buy this stuff actually call themselves investors. It’s hilarious.
Michelle Hawkins 34:32
Well, are they just looking for a place to store their money in dollars? Right,
Jason Hartman 34:37
a lot of that a lot of those are Chinese buyers, right?
Michelle Hawkins 34:40
They just want to buy or store for their money. They don’t even care so
Jason Hartman 34:44
so. Yeah, that’s kind of true. I mean, think, yeah, that’s a good point. In a world of negative interest rates are in some places. You literally have to pay the bank to hold your money. And if it’s here in the US, you barely get paid for Bank to give you money. I opened up a couple of accounts at another bank just to be under the standard, the FDIC limit great problem to have. I love that problem. But and they, I actually got a thank you note, I couldn’t believe when I After opening the account and I think it’s because the woman like my dog so much, but I don’t know. They used to give you gifts like toasters and stuff when you open bank accounts, but not anymore. It’s like, it’s like they’re doing you a favor for keeping your money. I guess that’s the way you can look at this property. Yeah, that’s about what it is. But it does have a corner lot. Well said. So there you go. There you go. Unbelievable. What else should we talk about anything? Yeah. How about more of the Do you want to talk any more about the fears of doing this and that type of thing, Michelle,
Michelle Hawkins 35:53
I’m sure.
Jason Hartman 35:55
I mean, some of the concerns you’ve had and some of the things that have gone through your mind well
Michelle Hawkins 36:00
You know, that’s, I’m sure it’s similar to what a lot of people are thinking like, well, what what if the tenants destroy the place? Or what if they don’t pay, you know, vacancy and all of these things, and that definitely is a concern. And so that’s why I decided to come to some events because I wanted to be able to just vet the entire process. That’s what’s great about me, the Masters is that you meet a lot of different providers. And, you know, you can kind of get a sense from their presentation as to how organized they are. But then beyond that, I actually saw my first properties in Memphis. And so I actually went to Memphis for a day, and it’s worth it, it’s worth the plane ticket, to go there for a day just to see the operation, and know that it’s real, right? The properties are real, the company is legitimate. You meet the people that you’re going to be working with virtually, you know, moving forward. And so that’s a great idea. You know if that’s not one of our events, but go and meet with our providers in one of our markets have a you know, just fly out there and have them drive you around and show you their operation their properties, go see their office, meet their staff meet their team. This stuff’s real. Mm hmm. And I can tell you from Cincinnati that we were just blown away with the provider there. She’s awesome. And, and I think she sold a lot of properties just based on just what a fantastic businesswoman she is.
Jason Hartman 37:31
Yeah, she really is. She’s, she’s very good. Very good. She does a great job. No question about it, you know, other operators in other markets, they they do a great job, too. Maybe not as nice and event is that one, but they they run fantastic businesses, like I just bought two more properties in Memphis. And last year, I bought another two properties in Memphis from a different provider we have there. So we have a couple different local market specialists and now I’ve purchased Two from each in the last year and a half. It’s interesting, they both do a great job in a different way. They have different personalities and different ways of doing things. And that’s part of that whole embrace the fragmentation concept. But yeah, phenomenal. And I was really pleased that I got properties is good as I did. Because I gotta tell you, I was in fear that that wouldn’t happen given the dwindling inventory challenge.
Michelle Hawkins 38:27
You know, I’ll tell you what, what surprised me when I started doing this. When when I was actually shopping and was going to pull the trigger was that it’s actually competitive, right? You You do need to be able to make up your mind very quickly, because if you don’t, someone else will. And actually, that actually gives me some pause because it makes me think well are you know, why is everyone in such a hurry? Or why aren’t people taking a little bit longer to do their due diligence, but I think once you get to a certain point in your investing, you don’t Need to? You know, you just know?
Jason Hartman 39:02
Well, yeah, it’s the first time is the hardest. And after that you just kind of get a sense of it. And it’s really not that big a deal. But yeah, you know, you just know, and you might miss a couple of properties and lose them and just try not to get too discouraged. And then, you know, another one will come along. That’s really all you can say. But yeah, yeah, good stuff. Well, hey, this has been great having you share some of your experience and some of your thoughts on the show. Michelle, thank you so much for doing that. Do you have any particular plans or goals for your investing? I know you’re, you’re kind of a planner. So I thought I’d ask you that question.
Michelle Hawkins 39:40
Well, we’re in the process of doing a cashout refi on the house. And oh, good idea. Good idea. Yep, got a great rate, it’s locked in. So just waiting for that to close and then I’m going to go shopping for some properties I’m hoping to, to get my first 10 loans done this year. And then after that, we can do another They’re 10 for my husband. So,
Jason Hartman 40:01
yeah, yeah, that’s great. But you can do 10 loans each and you’re both working Yes, with great jobs by the way. And so that that’s a that’s a perfect plan 10 loans each and hopefully that’ll loosen up in the future to where you can even do more loans. You know, what seems so crazy to me is that, really if you think about it from a lender’s perspective, they should feel more secure making loans on sensible prudent income properties to borrowers than they should about loaning people money on their own home, because on their own home, they have no income. That you know, that’s just a completely risky deal. If you ask me. If people get laid off from their job or get into financial trouble one way or another, their own home is the hardest one to support because it doesn’t have the income the investment properties. There you the tenant is paying the depth for you now, not not with that duplex on Bobo Island mind you. Not even was, but on sensible ones it is right? Yeah. Yes, absolutely. So 10 loans each and then onward and upward from there maybe even more, right?
Michelle Hawkins 41:09
Oh, definitely. Yeah. No, the goal is to, I don’t know, 4050 something like,
Jason Hartman 41:15
past a good job.
Michelle Hawkins 41:16
I don’t want to retire to the State Teachers pension.
Jason Hartman 41:21
Yeah. That you’re not into that you don’t think that’s a good deal?
Michelle Hawkins 41:24
I don’t know. It’s that it’s gonna be there. Well, I mean, it you know, who knows?
Jason Hartman 41:29
That’s a, that’s a very valid concern. I think people in Chicago or Illinois in general, are feeling that and in California, I think there’s good, good cause to think that too, you know, there’s no security you got to make your own security in the world, especially nowadays. So do that. And do that by planning and acting and not relying on the government or anybody else for your security. Good. Michelle, thank you so much for sharing this today. I appreciate it. And happy investing. You sure Thank you for having me.
Michelle Hawkins 42:03
I’ve never really thought of Jason as subversive. But I just found out that’s what Wall Street considers him to be. Really now, how is that possible at all? Simple. Wall Street believes that real estate investors are dangerous to their schemes? Because the dirty truth about income property is that it actually works in real life. I know. I mean, how many people do you know not including insiders who created wealth with stocks, bonds and mutual funds? those options are for people who only want to pretend they’re getting ahead. Stocks and other non direct traded assets are a losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades. That’s because the corporate crooks running the stock and bond investing game will always see to it that they win. This means unless you’re one of them, you will not win. And unluckily for Wallstreet Jason has a unique ability To make the everyday person understand investing the way it should be, he shows them a world where anything less than a 26% annual return is disappointing. Yep. And that’s why Jason offers a one book set on creating wealth that comes with 20 digital download audios. He shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us. We can pick local markets, untouched by the economic downturn, exploit packaged commodities investing and achieve exceptional returns safely and securely. I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government. And this set of advanced strategies for wealth creation is being offered for only $197 to get your creating wealth encyclopedia book one complete with over 20 hours of audio go to Jason hartman.com forward slash store You want to be able to sit back and collect checks every month. Just like a banker. Jason’s creating wealth encyclopedia series is for you.
This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email media at Hartman media.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own and the host is acting on behalf of Platinum properties, investor network, Inc. exclusively.
Brittney joins Jason Hartman to talk about Port Richey and the Greater Tampa areas as new real-estate markets in Florida. Jason also shares going to Jekyll Island, Georgia, the Federal Reserve’s birthplace, and how it brings to mind that Central Banks control governments around the world. Jason and Brittney also discuss the concept of investing, which is to plan for the future today and delay gratification to save capital.
Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Announcer 0:13
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution. For real estate investors,
Jason Hartman 1:03
Greetings from sunny South Florida. I am coming to you today from South Beach, Florida, Miami area. And this is your host, Jason Hartman. And I want to welcome all of our listeners from 164 countries around the world. Thank you so much for joining us today. And we’re going to talk about several things of importance. But one is how you can win a nice little contest we’re having, and it’s super easy, and we have a lot of winners. So here with me to explain the contest is Brittany, you’ve heard her on the show before Brittany, how are you?
Brittney 1:36
Hi, good, Jason. Glad to be on.
Jason Hartman 1:39
Welcome. Welcome. Hey, how long have we been working together? Brittany? I can’t believe you’re still putting.
Brittney 1:47
Yeah, no, I enjoy it. It is Gosh, going on seven years. It’ll be in August. Oh, no. Eight years. I think 2008 right. Yes. Is it 2016 is 2016
Jason Hartman 2:01
Oh, yeah, my math isn’t good at all. No, you know what my I tell you something my mom taught me a long time ago when I was first getting into real estate, even though I kind of got her into real estate, but she started six months before I did. She taught me to always use the calculator. And I think that has impaired my thinking. Sure, yeah. Because you always have this crutch, you know. So whenever I want to add like, one plus one, I just pull out my handy HP 12 c financial calculator, and I put one plus one. And in the information age, one plus one doesn’t always equal to you know what it equals? What’s that? 11 Oh, yeah, exponential. We live in an exponential world, where it is an amazing time to be alive. And less amazingly, we have this cool little contest, so why don’t you tell our listeners about it?
Brittney 2:52
Sure. We have three different ways you can win. You can win a pair of tickets to the Cincinnati property tour, plus creating wealth. Education for the weekend that includes the bus tour and includes your meals for the weekend. And it includes educational conference as well. And we have six winners that will draw for that you can also win a Jason Hartman University annual membership, which will draw six winners for that as well. And our grand prize is all expenses paid trip to the property tour for the weekend, that includes airfare, as well as the tickets for the weekend. So I believe I did the math on this and it was over 1100 dollars, you’ll be saving. So you will get a $500 travel allowance which will cover your flights. And you know, depending so
Jason Hartman 3:49
if you’re if you’re coming from Europe or Japan, or something like that, this probably won’t quite do it, but it’ll be an allowance toward your airfare, you know, so just just a little taste claimer there clarification. Yeah,
Brittney 4:01
yes. And we will choose one winner for that. So the winner, they will have that travel allowance to use towards their ticket or their ticket plus a guest if they want to bring a guest as well.
Jason Hartman 4:12
Okay, so here are the questions. Of course, I’m going to say what do you need to do to enter the contest? It’s pretty darn easy, but also a question in on the minds of many listeners, because we’ve had, I think about three dozen people sign up for the tour already. And the creating wealth seminar. It’s a combined weekend. It’s a weekend event with the seminar and the tour woven through the weekend. So you get to you get the education, and you get to see actual properties. And by the way, listeners, I’ve got to tell you, this is what is this is one of the things that really differentiates us from all of these other I hate to say a bit cheesy and sometimes less than reputable real estate gurus out there. Maybe more than just sometimes is that we have to actually put our money where our mouth is because all of the education that we give you at our events, we actually are in the real estate business, unlike most of these gurus out there, so we’re actually going to provide properties that you can actually buy. So what we talked about and what we show you on the performance for properties, we have to make that come true in real life by providing actual inventory that you can buy as investment property. And let me tell you, that is not an easy task. So that’s a big differentiator. And so, Brittany, you can tell us how you can win, but also the common question among so many of our listeners. So you know, about three dozen people out there have already signed up for the tour. What if you know, the question is going to be, can I enter and can I potentially win the contest? Even if I already bought tickets for the tour?
Brittney 5:49
Sure. That’s a great question. So how you enter is first of all, I want to say this go to Jason hartman.com slash contest. And you can enter there. Yes. If you have already registered for the tour and you end up winning Of course, we will refund your tickets. And if you’re the grand prize winner, then we’ll refund your tickets plus you get that all expenses paid travel allowance as well.
Brittney 6:14
And,
Jason Hartman 6:15
okay, there’s a short there’s three different ways that you can enter. And of course, you can just do one or you can do all three that if you do all three, it betters your chances to win. And Jason, should we say you have to do all three to win the grand prize? Um, well, we should say that stipulation. I don’t, I think it’s just it’s a point system, right? So they get more points if they do more things. And if someone wants to win the grand prize, and they did all those things, then you know, you’re not gonna win the grand prize because you didn’t get as many points. Right.
Brittney 6:48
All right, Jason’s making it easy on you. Because many of us Yeah, sure. Yes. Like Jason saying it explains when you see the contest and enter at Jason hartman.com slash contest. There’s three different ways to gain points you follow at Jason Hartman ROI on Twitter, you give a tweet about the contest or about Jason Hartman. And then you give us a review and subscribe to the creating wealth podcast on iTunes. Brittany, I gotta tell you,
Jason Hartman 7:17
I’m getting so proud of myself. I’m actually using Twitter for the first time in years. Yeah, you know, I sometimes folks, I’m a little late to the party. And this is one of those times you set up a Twitter account many years ago, Brittany, I’m gonna say you did that and maybe 2009 or something. And I just never really was to engage with Twitter. I never wrap my head around how it works. And I’m starting to come around. I don’t quite totally get it yet. But I’ve been I’ve been really sending some of my own tweets, you know, and it’s kind of nice. And I’ve got a I’ve got to do some tweets about the the trip. You know, Twitter is a pretty powerful thing. And I gotta tell you, the only social media program I’ve really ever related to so far is Facebook. Some people are now calling it fake book. I’m really, I’m shame on fake fake book. They’re suppressing the news. And I just recently read an article about how it’s really time to start worrying about Facebook because they’ve got a political agenda. And they’re influencing the election. And they’re influencing votes. And they’re, they’re only showing the news they want you to see. You know, I hope you know, this scandal broke last week about a Facebook employee who said that they were regularly told to suppress certain news, especially conservative political news, in the news feeds and promote news that makes the right the political right look bad. This is just disgusting. It doesn’t matter what side of the aisle you’re on. I think it was Voltaire who had this great quote, he said, I may disagree with what you say. But I will defend fervently you’re right to say it and you know, I tell you something No matter what side of the aisle you’re on politically or in any issue, it doesn’t matter. I mean, a lot of issues are certainly political. But on any issue, you had better be for free speech. Because if you are not, the next time it comes around, it could be your speech that’s getting suppressed. So you better just buy into the idea of this with all of its good and bad. I think it’s just super important. Now, I get the sense that we’re going off on a tangent.
Brittney 9:31
I do that is very unfortunate, like any mainstream media, you know, it’s it’s getting manipulated, and that’s that sad, I agree. But back to the contest, and I did want to mention one thing about Twitter as well and the way that they can utilize it being the listeners is just talking to you directly. Jason, as you’re on these trips, and you’re making these tweets. You know, this is in real time you tweet that message and it will come right away. And you can see where Jason is. make recommendations for him to either stop in eat at a cool restaurant, which I know he would love and appreciate or a cool coffee shop. Or, you know, Hey, I know this provider in the area that has great income properties, will you check them out for me? You know, those things Jason could just jump on he’s, you know, pretty good at planning ahead, but also being spontaneous all at the same time. So please reach out to him if you have any questions. Of course, the The great thing about Twitter’s are short, sweet and to the point, right, so Jason can reply right there or he can answer those on the podcast.
Jason Hartman 10:34
Absolutely. And, you know, Brittany, that leads really to the next thing now that you know, I’ve just Fakebook. Okay. And some people are calling a Mark Zuckerberg. I’m sure you’ve heard that, you know, take the Zuckerberg and put an F in front of it. It’s a whole different word. But yeah, I just think that’s really disgusting. So hopefully we won’t have to worry about that. But let me let’s talk a little bit about my travels. Because I have been traveling for almost two weeks now I’m now in South Beach, Miami, Florida area. And this trip started with me landing almost a week and a half ago really, or Yeah, a little over a week and a half ago, I guess, in Jacksonville, Florida, going on a little VIP mini property tour for a few of our venture Alliance members. And then we we did a little caravan up to Jekyll Island, Georgia, of course the birthplace of the Federal Reserve. And we stayed at the exact same hotel resort that the creators of the Federal Reserve state at it’s called the Jekyll Island club, and our hotel and club and it was What a gorgeous place, Jekyll Island union. You know, you can see why the ultra rich who aimed to control the world and then that did end up controlling the world through the Federal Reserve and through the central banking cartel. You can see why they would choose Jekyll Island. I mean, it was just It was just gorgeous. Okay. And the hotel where we stayed, you know, it’s certainly old. I mean, the Federal Reserve was created over 100 years ago and, and it was there back then. And it’s funny, because when we started our meeting on Saturday morning, we had our meeting in what is called the Federal Reserve room. Literally, on the door, there’s a brass plaque that says Federal Reserve room and outside it said venture Alliance meeting in the Federal Reserve room and take a picture that oh, I knew you’d say,
Brittney 12:33
Oh,
Jason Hartman 12:34
I think maybe one of our one of our venture Alliance members took that picture I sure hope they did. Why did not take that picture, unfortunately. But I mean, it was just really, really funny being there. And of course, they don’t hide the history of it. Because one they have all these great old pictures on the wall. They have the big picture above the fireplace in the room had a I think it had a fireplace. Yeah, yeah. See? Observing I can be, I could not be a detective, I’d miss a lot of things. There was a big picture there that was there. I think it was above a fireplace, if I’m not mistaken. It had pictures of all the men who met there, okay. And it had a little biography of them. But then one of the other pictures on the other wall had a picture of the resort. And it had a picture of the building, either under construction or after it was just built, you know, these are all black and white pictures, of course. And it said that the original cost of the building was $45,000. And so, our venture Alliance members and all of you podcast listeners as well being so attuned to this kind of stuff, I mean, I thought I was going to be the Brainiac of the group and just pull out my inflation calculator and adjust that for inflation to you know, the current day and see what it would cost today. Right. And someone already did it. I just thought that was so funny, how attuned we are to understanding Really the greatest scam ever perpetrated on humanity, which is central banking and monetary policy and, and the way you know what, why in the world should the value of our savings, our stocks, our bonds, our equity and real estate and thankfully, in a way, our debt be controlled by some small pseudo governmental private corporation called the Federal Reserve. And whether it be the European Central Bank, or all any central bank around the world for any country, they control the wealth of the population. That that’s just crazy that that should be that way. But that’s the way it is. And so it was a fascinating trip. I mean, it was really fascinating and what just it was just gorgeous. We took a ride and a horse drawn carriage and in one of our members, Mike, he’s a Russian guy who’s in the hard money lending business and He brought along this bottle of Beluga vodka and the bottle is gorgeous in and of itself and, you know came in this blender case a
Brittney 15:08
picture that Oh, yeah, yeah, I took a picture of priorities right some pictures. Yeah.
Jason Hartman 15:13
And so we’re drinking vodka is we’re being pulled by a horse drawn carriage and talking and we’re, you know, the guide is touring us around Jekyll Island and showing us well this is where that happened and this is and and either I or one of the other members Chris and his dad Don stayed it literally Elizabeth, who’s one of our members figured this out. We actually stayed in JP Morgan’s condo. We like slept in the same exact room. Okay, one of one of our rooms was probably his condo from what she could tell. It’s just fascinating. I mean that that was were such an incredibly powerful entity was created. And of course, you all listen to all of you regular listeners, listen to G. Edward Griffin talking about On the show and he of course wrote the great book The creature from Jekyll Island So, so that was absolutely fascinating It was a lot of fun and then we met we met on Sunday again you know we have meetings both days and then one of the my favorite times that was Sunday afternoon when Neil and Elizabeth pulled up some Adirondack chairs under this big beautiful tree and we just all sat there not all of us were still there a couple of people left to catch flights and stuff but it was awesome just sitting there under this tree talking we were doing some hot seats and talking about stuff and and of course you know we were drinking beer and it was we’re just having a great time it was so so relaxing I I rarely do that in my life. I don’t know you know hopefully you do it well as a new mom you probably don’t do that too much but not
Brittney 16:47
too much in the expecting part probably limits limits the drinking as well.
Jason Hartman 16:51
Yes. Well that did it hopefully you’re not either and I know you haven’t given up smoking. Gosh, yeah, of course. Yeah. You know, you know what I realized, by the way, I got a comment. So I’m here in South Beach, Florida. And I’ve been here many times. And I just realized every time I come here, how much I sort of don’t like this place. It’s First of all, it’s massively expensive South Beach. And of course, we got to talk about the rest of my tour through Florida and the income properties and so forth. But South Beach, must think it’s New York City somehow, because the prices are exorbitant here, you know, the food and drink and hotels. It’s just very expensive here, and I’m here for a conference. I’m going to be speaking twice at this conference that starts tomorrow. And it’s a conference about single family home investing. I’m speaking on property management. And then I’m also speaking on demographics. One of my favorite topics. Of course, I’m joking. You don’t smoke, obviously, but smoking, what a terrible habit. And so many people here smoke and they just drink all the time. And I’ve just come to realize that, like, if there’s one difference between success and failure in life, it’s being able to control one’s urges. You know, it seems like there are times that I get really stressed out and I have huge problems, you know, if you, if you think having money eliminates your problems, no, it just adds zero to them, okay? They just get bigger as all okay? But in perspective, still better to have money than not, I’m sure a cigarette would make me feel better at times of stress, but God I’m not gonna I wouldn’t make you smell better. I wouldn’t make it smell better, that’s for sure. But God, I’m not gonna do that. Right. And, and it just seems like you know, people that have trouble in life that don’t get very far they just don’t control these, you know, this, this like need for instant gratification. And when it comes to investing, like think of the concept of investing in real estate or whatever the whole concept is that you Save and form capital, you delay gratification. You don’t get everything you want today, you don’t buy that cool new smartphone, you don’t buy that cool new big TV, don’t go on that vacation, maybe don’t drink so much. You get to bed earlier, you wake up earlier because of course I think that old saying is pretty true Early to bed early to rise makes a person Healthy, Wealthy and Wise. And you do the concept is you delay gratification, and you form capital you save for your future. And, you know, that’s what successful people do. I mean, you could argue that they’re, they’re more intelligent. I don’t know, I see a lot of successful people that don’t seem very smart to me, but they’re smart, in least in one way in and you know, maybe this is a legitimate form of intelligence, being able to see the future, right, and being able to plan for the future today and being willing delay gratification for a better future. And if there’s one key, that’s it, you know, like in anything in life, right? whether whether it be health and fitness or investing, or anything, right learning, you’ve got to delay gratification to maybe be in a classroom or be listening to a podcast like this when everybody’s out there playing. Any thoughts on that?
Brittney 20:25
I think the delay gratification just sums it up really well. I mean, because right when you started talking about smoking, My mind went there as far as it’s also just so expensive. You know, think about depending on how many years you’ve been smoking, add that all up Plus, you know, if you like coffee on top of that, if you have excessive drinking, or, you know, I’m not saying you can’t have a drink here and there, you know, have one with dinner with friends, but just start adding that up. And you take that and a few other you know, things here and there and you got an income property. Yeah. And so it’s Really that you know, especially several years ago, but you know, now you might need a little bit more, but it’s still there and the the dollars add up,
Jason Hartman 21:07
be willing to delay gratification for a bigger future that is the, whether it be at the national level or the personal level or the the corporate or business level. That’s, that’s what it’s about folks. You know, that’s what it’s about. It really is at the core of it. Hey, let’s talk a little bit about the trip and some of the different properties I saw and stuff like that, because I didn’t do all that great stuff you’re suggesting I do on Twitter now that I actually use Twitter. And I’m, I’m kind of upset with Facebook, as you can tell. Everybody go out and call it fake book. Okay.
Brittney 21:43
Hashtag hashtag fake book. Oh,
Jason Hartman 21:45
hey, I did a hashtag on Twitter and I hope I started a new one. Shame on Facebook. There you go. Hashtag shame on Facebook. I think I started that one, because I looked it up first. And it didn’t seem like it was out there. So if I’m doing it right, but again, I’m new at Twitter. So, yeah, yeah.
Brittney 22:02
Well, so Jason, tell us a little bit about where you’ve been. What markets? I mean, are there any potential markets for income properties? And tell us about it?
Jason Hartman 22:11
Yeah. So first of all, food is a tricky market. Of course. It’s a huge state. It’s like saying California, right. It’s a big place. So there are a lot of different markets. And as we’ve talked about on prior shows, there are there’s no such thing as a national housing market. There are about 400 local markets or metropolitan areas, right MSA is metropolitan statistical areas, but within every MSA is a whole bunch of sub markets within those and so you’ve got to be very micro focused on this stuff. And you’ve got to understand that all real estate is local. All real estate is local, of course, I basically after Jekyll Island, I drove back down to Jacksonville, then down that coast. area a bit on the eastern coast. Okay. And then went through well looked at some stuff in Daytona Beach area, didn’t really find anything there. Now we have done business in deltona. Okay which is different, okay, which I didn’t know that right away when we started doing business there. And I thought Daytona Beach that’s famous. And I guess Daytona Beach is trying to claim that they are the most famous beach in the world. There’s a huge sign out there that says that so it must be true. And of course, that’s a big Spring Break destination and so forth. And then went through Orlando, of course, you know, we’ve done quite a bit of business in Orlando over the years and we had a we had a property tour there somewhat recently. Then went over to Tampa, St. Pete area, and I looked at two markets there. Of course, I looked at Tampa thinking again how much I really like that city. And again, My mind went to Should I move to Tampa because my ultimate goal at some point in my Life is to live in a no income tax state. You can’t get out of paying the federal tax. But if you live in places like Washington State, like our venture Alliance members, Neil and Elizabeth do, or if you live in Nevada, or if you live in Texas, or Florida, or Tennessee, you know, any of these no income tax states, there are several of them. You know that that’s a huge difference. When I moved from the Socialist Republic of California to Arizona. My taxes instantly went down by over 60% on the state level, so that was fantastic. But Arizona still has tax now I’m even thinking, gosh, if I could, if I could avoid a state tax, that would be awesome. So I really like Tampa. It’s too expensive in the core to actually have working investment properties but it you know, it’s great place to live. I looked at it, you know, selfishly on this tour, right. I did look at some homes that I’d consider buying myself right. And there was some great stuff, but first, we looked south of Tampa In some of the markets down there, and we met with a new potential provider, a wall street guy, who basically just left Wall Street and decided he was going to get into the real estate game where he was just fed up with the cookery and Wall Street and, and all of that stuff, but he is working with some institutional money to buy properties. So we looked at some of his inventory, and I can’t say it was like, you know, a home run, okay, but not bad, not bad. There’s some possibilities there, we’re going to look at more inventory, you know, on on these trips, sometimes they don’t have the exact stuff we really need to see. So we’ll see maybe four or five properties and then we’ll just look at some neighborhoods, and some of the neighborhoods that we went through to get to another neighborhood, we’re pretty rough, frankly. But when you get to the, you know, through to the part where we were thinking of investing, sometimes they got pretty good. So that’s just something to to keep an eye on. And then we did the opposite thing. We drove over an hour, all the way through. And when I say we, my mom was with me and of course Coco was with me. So we drove up to the north side of Tampa to Port Richey, and one of our venture Alliance members, Gary asked me to check out that area and he’s been investing with us for several years. Hi, Gary. So he asked me to check that one out. And we did. We went up there and took a look. And wow, I didn’t think the area was real great or anything, but according to our provider there, he says that they’re opening a new Amazon distribution center. And and by the way, shame on Amazon too. Okay. Do you know that Jeff Bezos hired like 20 reporters to go and like defame Trump, and listen, I don’t even like Trump. I think he’s weird. Okay. But I mean, that’s just wrong. Like this is like predatory journalism. Anyway. Okay, another tangent a risk there. So I’m gonna shut up now. And, and we looked at this market, and there’s a new Six Flags amusement park, going And not too far from there. And so that’s going to stimulate the economy a lot. And kiss houses are clean. And there and I took some videos, a little two, three minute videos of the houses, and we’ll probably get those posted on our YouTube channel. As I know, you’re going to say we better do that, right? Brittany, I know you’re gonna, you’re going to say if you’re going to insist on that, but they were inexpensive, like for $79,900 in a in a decent working class neighborhood. You can get a good rental property there that he said projected rent would be about 850 for that. And for $99,000 you can do much better. I mean, it was amazing how much that $20,000 improve the neighborhood in the house itself. So I was pretty impressed with that. I’d say that was probably the best thing I found on this trip. Then I spent a little more time in Tampa and just kind of hung out, looked at some stuff, looked at some different neighborhoods there and so forth. And that was another one of my real estate friends and he started sending me some inventory in Tampa and a little bit too expensive to make the numbers work, but we’ll keep looking there. If we could do the greater Tampa area, that would be phenomenal. I’d love to do that market. I’ve always liked that city a lot. And then I drove across the famous alligator alley, they call it and I drove basically across the state and drove into Miami and now I’m here. Did you see any alligators? You know, I did not. But I heard when I was driving across there because, you know, I’m kind of worried. I’ve got Coco with me. I can’t let her out. You know, what if she gets eaten by an alligator or something? It’s very hard to walk that dog in Florida. You know why? Why? There’s so much life here. She’s always hunting.
Brittney 28:45
I mean, the bug is two year old.
Jason Hartman 28:47
Yeah, exactly. The bugs are big enough to hunt here. Okay. And there’s a lizards and squirrels and Oh boy, well, plus
Brittney 28:55
Jason. You had to actually drive your car so you were probably preoccupied with that. Not being able to look out for the alligators, right?
Jason Hartman 29:03
Yeah, I didn’t have the self driving Tesla with me, unfortunately. But yeah, so no, but but I asked the guy at the hotel before I left to drive across alligator alley, I said, Why do you call it that? Are there just alligators? And he says, Yeah, sometimes they’re right in the street, you have to stop and go around them. And he says he’s seen that twice himself. So I didn’t see any but could have. And then I’m doing two speaking engagements at this event here in South Beach, Florida. One is on property management, and the other is on demographics. And we are going to make my slides available to the listeners, right. Yes. And we can just use the old URL that we did before and I could give it out now, although they will the old slides from the last conference I spoke at are there and you can get them at Jason Hartman comm slash I am n Jason hartman.com slash Im n and we will put the new slide They’re probably on Wednesday after my talk. Okay. How’s that sound listeners? Good, Brittany good without
Brittney 30:07
Mm hmm. As long as we don’t want to keep those, you know, still available, and then we’ll use a different URL. They got the old ones already.
Jason Hartman 30:15
Okay? So they don’t need those old ones. But if you want the old ones, then go right now to Jason hartman.com slash Iron Men on Monday or Tuesday and get them and then we won’t have the new ones up there till probably Wednesday. Brittany, is there anything else we should talk about? before we adjourn?
Brittney 30:33
Well, you really covered Florida, I have the map up in front of me, I kind of want to do a visual for our listeners, and maybe send out an email as far as all the places you went to and just kind of recap what we just did. So look for that in your email box soon. And if you’re not on our email list, make sure you go and opt in at Jason hartman.com. And then we’ll recap that for you guys too. And send it out
Jason Hartman 30:55
and be sure to join our email list. You know, we really don’t ever push this too much, but But you really should, because we have promised ourselves we’re going to get better at emailing stuff. And we’ll have various contests and promotions and good stuff. And we’re going to start reinvigorating our old frugal Friday. Are we Britney? Are we going to do that? We are, we are okay.
Brittney 31:19
And it’s not every Friday, then it’ll definitely be more on a regular basis. But yes, you know, we have a lot of good products to offer. And we want to make sure that it’s enticing and you know, there’s some things that will make people want to buy because it’s a lot of great content that you guys really should get your hands on.
Jason Hartman 31:37
Yeah, good stuff. And, you know, I should also mention since we’re talking about products, the sale at Hartman education comm that’s Hartman education calm is wrapping up here and I believe that’s going to end on like Wednesday. So you’ll want to go check that out. You can buy that bundle and a good bargain price. bundle of our online products are two of our meet the Masters courses. One of our Jq live courses on there. So lots of good education there. Hartman education comm You know, there’s free stuff up there as well. So check that out. And be sure you subscribe to the show. We also appreciate so much your writing review for the show. So thank you for doing that. And be sure to subscribe so you don’t miss any episodes. And also thank you for telling your friends about it. We will keep them coming as we approach Episode 700 in the not too distant future. I can’t believe it. But you know, in not too long, we’ll be at Episode 1700 so I can hardly wait.
Brittney 32:34
You know, I think I came on board Jason in Episode 67. Really? You remember that? Oh, wow.
Jason Hartman 32:40
That’s the first one I remember. So it may have been a couple before that. But yes, it was right around that timeframe. And wow, it’s been you’ve been busy folks. All listeners can chart their life based on our episode numbers. Forget about date and you’re just go episode number yet I was I was having my kid and episode number 692.
Brittney 33:07
Where are you going to be at mid September? Should we predict?
Jason Hartman 33:09
Well, that’s gonna be it too. But yeah, maybe well, that’s a good idea. All right. Hey, folks, thank you for listening, go check out the properties at Jason Hartman calm in the property section. inventory is scarce, it is going fast. One of our venture Alliance members was rather upset that he lost a property he wanted. So we’re sorry about that. That’s just the way the market is. Remember, real estate has it just has built in scarcity. But keep the faith because there’s just nothing better out there. It’s the most historically proven asset class in world history. We will keep good inventory coming and you know, on this britany I’ll tell you something, people always ask about inventory. There’s just not enough to choose from, when are you gonna open this market or that market and I tell you, it would be really easy to create tunnels. have new inventory of properties on the Jason Hartman comm website if we weren’t picky,
Brittney 34:06
yeah, that’s what I was gonna say, then we could have more, but the quantity is going to go down or the quality excuse me is going to go down.
Jason Hartman 34:12
Yeah, the quantity quality would go down. And look, folks. I mean, we’ve been doing this a long time. You only get one reputation in life. And we just don’t we could make a lot more money if we peddled crap, like some of our competitors do, okay? But we’re not going to peddle junk properties. We want to really try and get good quality inventory for our clients, for our investors. And we will continue to do that even if it means not having as much inventory because what we do have, we want it to be of better quality. So thank you all so much for listening. Brittany, thank you for joining me.
Brittney 34:49
Glad to be here.
Jason Hartman 34:50
Thanks. And happy investing everyone. We’ll see you on Wednesday for the next episode.
Announcer 34:55
I’ve never really thought of Jason as subversive but I just Found out. That’s what Wall Street considers him to be. Really now How is that possible at all? Simple. Wall Street believes that real estate investors are dangerous to their schemes? Because the dirty truth about income property is that it actually works in real life. I know I mean, how many people do you know not including insiders who created wealth with stocks, bonds and mutual funds? those options are for people who only want to pretend they’re getting ahead. Stocks and other non direct traded assets are a losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades. That’s because the corporate crooks running the stock and bond investing game will always see to it that they win. This means unless you’re one of them, you will not win. And unluckily for wall street. Jason has a unique ability to make the everyday person understand investing the way it should be. He shows them a world where anything less than 26% annual return is disappointing. Yep. And that’s why Jason offers a one book set on creating wealth that comes with 20 digital download audios. He shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has afforded us. We can pick local markets, untouched by the economic downturn, exploit packaged commodities investing, and achieve exceptional returns safely and securely. I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government. And this set of advanced strategies for wealth creation is being offered for only $197 to get your creating wealth encyclopedia book one complete with over 20 hours of audio, go to Jason Hartman comm forward slash store. If you want to be able to sit back and collect checks every month, just like a banker Jason’s created Wealth encyclopedia series is for you.
This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email media at Hartman media.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own and the host is acting on behalf of Platinum properties, investor network, Inc. exclusively.
To start the show, Jason Hartman introduces Buydown and gives his thoughts on whether it’s better to buy a rate down or put more money down. He also explains how points work and how they affect your loan amount. Afterward, Jason plays a recording of his session on SWOT, aka Strengths, Weaknesses, Opportunities, and Threats, as they apply to real estate.
Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Announcer 0:12
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution. Real estate investors.
Jason Hartman 1:03
Welcome to the creating wealth show. This is your host Jason Hartman Episode Number 692 692 on the road to Episode 700, thank you so much for joining me listeners around the world. Today, our guest will be none other than that guy who is always going off on what’s he going off on? tangents. Yes, that’s good old Jason Hartman yours truly.
And this is a recording from a live talk that I gave on a SWOT analysis, SW ot story strengths, weaknesses, opportunities and threats as they apply to the most historically proven asset class in all of the world. And that is income property, income property. So we’re going to talk about what are the strengths and you know, we’re always talking about the strength. So actually, when you hear this recording, you’re not going to hear that much about The strengths. There are so many more than I cover in this SWOT analysis because it’s the most historically proven asset class in the world. Of course, you know that already because you’re listening to the show and you get it. It’s better than the modern version of organized crime known as Wall Street. Yes, the modern version of organized crime, the one that makes Al Capone that’s the old gangster, the Chicago gangster, the mafia guy, right? It makes him look like Mother Teresa in terms of the amount of money but Wall Street scoundrels are stealing. And you know, there was just another big scandal on Wall Street. Maybe we’ll have time to talk about that for a moment before we get to our guest our live recording of yours truly talking about SWAT. But before we do that, I want to talk to you about something called a buy down. And this is something that you may or may not want to use. As you are purchasing and financing your income properties, and maybe even your own home, it can be a very good deal. It’s not always the best thing to do. But we as long term income property investors, we like to buy and hold and usually say, hey, try and buy and hold your properties for how long? 27.5 years? Yes, why 27.5 years. So you can run the depreciation schedule, because income property is the most tax favored asset class in America. And 27.5 years is the depreciation schedule on commercial properties. It’s longer, it’s 39 years, so it’s not as good on those commercial properties. The residential investment properties have a shorter schedule, which means you get about 25% more time. benefit, because you get to depreciate them over a shorter schedule, which means more tax benefits sooner. And with the time value of money concept that we all understand because we listen to the show, and we’ve talked about it before, with the time value of money $1. Today $1 saved today is better than $1 saved in the future, because inflation will make that future dollar worth less money. And it’s not just inflation. It’s also the opportunity cost of what you might use that dollar for today, that could help you grow that dollar versus having it in the future and not being able to use it today. So it’s not the time value of money concept isn’t just about inflation. It’s also about opportunity cost. And remember, when you have money tied up in savings accounts, Home Equity, equity and income properties or rental properties or investment properties in a mutual fund in an s&p 500 index in bonds God hopefully you don’t have bonds those absolutely suck as I predicted they would. They’re really terrible now they’re actually more terrible than I thought they would be what I predicted that many, many years ago and talked about bonds, that’s a subject we should really do an episode on in and of itself, that bond subject. And when you don’t have use of that money, to put it to its highest and best use, that represents an opportunity cost. So you don’t ever want to have lazy money. You don’t want to have money tied up in things that isn’t providing the highest and best return on investment. You want to get the maximum ROI. So by downs, what is a buy down? A buy down is when you as a borrower, when you’re financing a property have the option to pay More loan points up front. Now why would you want to do this because you can buy down your interest rate in doing so. So points 1% of the loan amount. That’s a point. That’s what I didn’t know, when I went to my first real estate seminar at age 18. When the speaker got up there and he was talking about points, I thought, What’s a point? Well point is just 1% of the loan of the loan amount of the amount financed. So if you have $100,000 loan, one point would be $1,000. You have the option to prepay and pay more points and lower your interest rate. See points are really just prepaid interest. points are prepaid interest. So for example, if you’re going to buy a property to flip it, and instantly resell it, your goal as the buyer financing That property would be to pay zero points. Because you, you will only be paying interest for a very short time on that, that loan. And so it’s better to take a higher interest rate. And maybe pay say you’re a flipper and you’re getting hard money loans out there, right, which hopefully you’re not in that, you know, it’s not our thing too much. We do a little bit of it, but it’s not our main thing. Our main thing is buy and hold investing because, as I’ve always said, I’ve noticed just over the many years, I’ve been in the business, that the people who who do the flips, they have spending money, but the people who buy and hold the properties and build big portfolios, they have real wealth, and hey, spending money ain’t bad, but I’d rather have real wealth any day of the week. Okay? So points are just prepaid interest. So if you were doing a flip, for example, and you were thinking, well, gosh, I’m going to flip this property really fast. I know No, I’m gonna sell it in a month hardly gonna own it for any period of time at all. You might be willing to pay 16% Yes, I did say one 6% 16% interest with no points over maybe 10% interest with two points because points are prepaid interest. And if you’re only going to keep that loan for a very short time, it’s going to cost you more money to pay a higher point value or prepaid interest. Now let’s get look at the example that we might face. And I have to be frank with you. I don’t think these examples are very compelling, but I’m going to share them with you anyway. So I just got a quote from one of our lenders who if you talk to any of our investment counselors, they can refer you and I wanted to have totally accurate up to date pricing. So all of this is his math. And it’s his, his his point chart. Now when when you get alone an iPhone Several mortgage companies over the years I don’t own one now but I, I’ve owned several over the years, when you get a loan, what they call par meaning the rate being at par that means no points are paid at all. So at par, the rate today, according to him on an investment property is about and it depends on the loan to value ratio, your credit score the whole package, okay, understand that, but the rate he quoted was 4.875%. at par, meaning you don’t pay any points, that’s the rate you’ll get 4.875% of course rates are subject to change without notice. Okay, so if you wanted to pay one point, and by the rate down, you would get a rate of 4.6 to 5% 4.6 to 5% with one point point or $1,000. Now, what would be the difference in your mortgage payment on a $100,000 loan? So in this example, say you purchased a $125,000 property, and you put 20% down. So you got an 80% loan to value ratio, that means your loan amount would be a nice even $100,000. And I point would be a nice even $1,000. The payment at par at 4.875% would be $529 per month. Wow, that’s cheap. Oh, wait. Ah, yes. We have some of the lowest rates in history right now. Are you taking advantage of that? Are you stocking up on these low cost 30 year fixed rate mortgages, they’re huge assets to us as investors. I hope you are. I hope you are. Okay. So with no points, your payment would be free. 529 per month, if you pay one point and by the rate down, your payment would be $514 per month. So taking the difference of what how much would that be? Well, it’d be 15 bucks a month less your time horizon to recoup, the cost of the extra point that you bought the rate down with would be 60. Approximately, I’m rounding slightly here about 66 months. Okay, before you would break even, that’s five and a half years. Now, I do have to say that buy downs that I’ve priced and actually done myself on my own portfolio over the years have been better than this. This is not as good as what I thought I would get. This time horizon is a breakeven point in five and a half years. Not bad if you’re going to keep the property for 27.5 years, or if you’re going to keep the property for eight years. It might may well be better to pay the extra point and by the loan down.
Jason Hartman 12:07
But usually I see the time horizon here of about three and a half years. Usually it’s a little better than this. And I don’t know if buydown pricing is just not as good as it used to be. Or if maybe our particular lender that quoted these rates, doesn’t have the best buy down pricing? I do not know the answer to that question. I’m really just wanting you to think about this. I’m wanting to give you an example of how it can be. Now the same deal, let’s just do some other math here. If you took that same loan, and you bought it down with two points, in other words, $2,000, your payment would go down to 499 per month, you would save 30 bucks a month, and your time horizon you can see how it would basically be the same right? So that doesn’t change anything but it does change if you change the law. to value ratio. So let’s do one more example here. And let’s go with a 75%. LTV or loan to value ratio, meaning on the same house, your loan amount instead of being $100,000. It would be $93,750. Okay? And that par because you’re putting more money down. Now, more money down is not the same as a buy down. You do, in most cases get a lower interest rate. If you put more money down. Well, of course, there’s less risk to the lender. So they’re better collateralized if you have more skin in the game, and they’re going to give you a lower rate as an incentive to put more money down. So if you put that extra 5% down, what is that that’s about $7,000 or a little less than 7600 6250 bucks extra down payment, you would get a rate of 4.5% Which would bring your payment right down to $475 per month. But remember, you have a lower loan amount here, you’re financing less. So what does that do? Well, the disadvantage is you’re going to get less leverage on the deal, you’re not going to have as much leverage. And because you get it because you listen to my show, you know that leverage is an extremely powerful tool, and used prudently and properly. It is a fantastic thing. I always say debt is my favorite four letter word. No, it’s great. I mean that in a positive way. I love debt. As long as it’s not consumer debt. I want debt. I want lots of real estate debt. In fact, there are old sayings that say things and you know, forgive me if I don’t get this exactly right. But I this is not my saying. I’ve just heard it out there. They say the amount of money you owe on your real estate today will be the amount of gain you have in I don’t know what they say like five years. or seven years or something like that. And so the theory behind that statement, or the thesis of that statement is that if you owe a million dollars, today on your real estate, that you’re going to gain a million in, I don’t know, seven years or something like that. I can’t remember the exact example they use. Having more debt is better, because you get more inflation and two step destruction, you get more leverage, you get less opportunity costs, because why? Well, you have more money freed up, heck, you could buy a whole nother property with that extra money, right? For example, if you’re putting that extra 5% down on this property, well, you do that four times with four properties. And hey, you could have just purchased another property and have a larger portfolio. So there are things to think about here that are important issues, and leverage, a very, very powerful tool. Okay, but looking at this example, you Your interest rate goes down to 4.5%. Now, what here’s a good comparison, what would it cost you? Here’s a good question. What would it cost you with an 80%? LTV or loan to value ratio getting the higher leverage amount to buy that rate down? Or is it better to just put more money down? It’s a great question. Jason, thank you for asking that. Great question. Oh, you’re welcome. That was a good question. Too bad. We don’t have stereo it sound like I’m talking to you in different ears. We always make the show as mono. So we’re more flat and boring, right. But if that was in stereo would have been kind of good. Anyway, so it would cost you 1.5 points or 1500 dollars. So you could either pay or you could you could get the higher loan amount and pay 1500 dollars, to have the same interest rate that you can get for free or at par with 5% more than that. So looking at that difference, the way we analyze that is we say, Okay, I can either put down an extra $6,250 in downpayment or I can simply pay 1.5 or 1500. dollars more in points, and I can have the same rate.
So, that’s an interesting analysis. And frankly, it’s hard to analyze that I’m not a mathematician. And I don’t exactly know how to weigh that out. Because you get less leverage, you have more opportunity costs, you have a lower loan balance, that’s why your payment is lower. It’s not just the rate, but your rate is also lower. So these are sort of amorphous questions. You can’t exactly answer that one. But on the buy down, you can answer that pretty scientifically, because all we’re looking for there is our breakeven point, what is the time horizon to the breakeven point? So let’s just look at one Example then we’ll go to our guest Jason Hartman. Oh, I get punchy sometimes when I do this, you know, by the time you hear this recording, I will be in Fiji. I’m recording it here in Scottsdale, Arizona, where it’s hot, but it’s a dry heat. I will be in Fiji at Tony Robbins Resort by the time you hear this, hopefully not getting bit by too many mosquitoes. But living with passion and hearing all about Tony’s great techniques in terms of life and wealth mastery. That’s the name of the events I’m going to there. More on that later. 4.5% no buy down at par for free at the 75% loan to value but what if we were to pay $1,054. Now let’s even do more. Well, what if we were to pay two points 1800 and $75 more, we could buy down our rate by a half a percent. So it would go from 4.5% To only 4% for a fee, a buydown fee of 1800 and $75. So what happens to our payment? Okay, the first payment is $475. god that’s so cheap. It’s mind boggling. You really got to stock up on these long term fixed rate mortgages. They’re a phenomenal asset. So the new payment at with the buydown is 448. So let’s take 475 and subtract 448 and that is $27 a month. And what do we want to do next, folks, you already know the answer. We want to take 1875 which is the amount of the buy down that’s what two points will cost you. And we want to divide by $27 and we get 69.4. That represents the number of months to your break even point. Now we take that and we want to divide it by two Well, so we know the number of years, and that’s 5.78 years. So interestingly, do you notice that on the lower loan to value ratio where you’re putting 25% down, the break even point is longer. Interestingly, in other words, paying more points on that deal is a little bit less valuable, you get less bang for your buck on that pie down than you do on the higher leverage buy down where you’re only putting 20% down on the property. So that’s kind of interesting. But again, I want to tell you that most of the buy downs I’ve seen and done over the years are a little bit more desirable on this, and I haven’t shopped for them in a few years. So the price of them just may have gone up. That may be what’s happened. Look at the deals, you know, I love it when you hear these real estate gurus out there, and there’s such a Bunch of crooks, half of them, half of them. Maybe 80% of them are crooks.
And they say things like, air never been a better time to invest in real estate. Ah, that’s wrong. That’s not true. Of course, there was 1972 was a lot better. 2010 was a lot better. I’m sure the deals ain’t as good as they used to be okay, to use slang. Obviously, this is not bad. I mean, if you can break even in five and a half years, this may well be something you want to consider. If you think that you are really going to hold these properties for the duration. If you’re going to keep them a long time, which if you’re following my plan, you probably will. That’s the likelihood. Now I move my portfolio around once in a while, but most of it is long term buy and hold stuff. As you know, and I’ve talked about this on recent episodes, I do some 1031 tax deferred exchanges. I sell One property and I get to in the exchange, hey, that’s a great deal. There are lots of things you can do move things around. But by and large, you’re going to keep your property more than five and a half years, based on the scenario I’ve outlined here today, it would make sense to really consider the buy down. Why do I say it? I wouldn’t absolutely do it. Okay, because obviously, you can just do the math and know you will definitely break even in five and a half years. Well, the reason I don’t say definitely do it is because of that opportunity cost issue. And that time value of money issue. Look, if you have to pay an extra $2,000 on the buy down. You do that 10 times on 10 properties, and you’ve got just about enough money to maybe buy another property, depending on how you finance it. It’s all complicated, of course, and how you sequence your mortgages and there’s a whole zillion other little issues there. But you know, look at it. learned about inflation from a fantastic economics teacher that I had when I was a young boy. And his name was wimpy. And he was on a cartoon. Yes, Popeye, you may know that, okay. And wimpy was on Popeye and wimpy taught me something about inflation. And he taught me something about opportunity cost and the time value of money. How did he do this? Well, this little cartoon character, I wonder if he even knew he was teaching me this. And here’s his famous saying, When be and I’ll try to impersonate him wimpy the cartoon character on the Popeye cartoon when he would say, I’ll gladly pay you Tuesday for a hamburger today. So he would always try when he was like this deadbeat and he would always try to get a hamburger today, but to pay for it later. wimpy understood the time value of money. Right. So there’s your little economic life From a cartoon character, how do you like that? We Yeah, you know, we do really sophisticated stuff on this show. Don’t wait. Alright, well, let’s jump over to the live recording, talking about the SWOT analysis, strengths, opportunities, our swings, weaknesses, opportunities and threats SW OT, make sure you visit Hartman education comm for some great educational products that go into tremendous depth. And they are unlike the podcasts Look, the podcast is a fantastic way to learn. But with a podcast, it’s more like reading a newspaper or a magazine or watching the news, right? It’s, it’s this and it’s that and it’s this hodgepodge of ideas. But if you want more structured stuff, get some of our courses, get our jQ Jason Hartman university course and you can get that at Hartman education comm or some of our products at Jason hartman.com either one and our meet the Masters recordings, you can get those there as well. Hartman education comm or Jason Hartman comm check those out. We’d love to have you take advantage of the many many of you have, be sure you’re subscribing to the show so you don’t miss any episodes. And thank you so much for your views on iTunes, Stitcher, radio or whatever podcast platform you’re using. We really appreciate the nice reviews and the kind words and if you haven’t reviewed the show, we would very much appreciate it if you do. Thanks for listening to this little intro on buy downs. And now let’s talk about the SWOT analysis.
First, we’re gonna start off with something we’ve only done once. And that’s a SWOT analysis. How many are familiar with SWOT? Yes, SW ot strengths, weaknesses, opportunities and threats, both the internal and the external threats and opportunities that come with real estate investing. And of course it covers the strings. These are internal things internal In our case, 2d investment, and they’re positive things. The weaknesses are internal factors, but they’re negative. And the opportunities are outside. They’re external. And they’re positive. And the threats are obviously external, but negative. So as we dive into this, let’s break this down and look at some of the strengths of income property as an asset class. You know what I say? It’s the most historically proven asset class in the world. Income property is the most historically proven asset class in the world. And one of the great things about it is that it’s so fragmented, right? You’ve heard me talk on the podcast before about what? embrace the fragmentation, right? embrace the fragmentation. And this is something that frustrates a lot of people when it comes to income property. They don’t like the fact that it’s fragmented. They think, you know, why can’t this be simpler? Why can’t it be easier? Why does my property manager in Orlando do that? things differently than my property manager in Atlanta. And they do things differently than my property manager in Memphis. Right. So that’s one of the frustrations we constantly hear from you. It’s it’s one of the things that really bugs people, why can’t it be more standardized? Why can’t it be more refined, more simple? Well, we are trying to help with that. And when Fernando speaks this weekend, he will talk about a big step that we took to that end to help you that we have never announced before, you’re going to hear it here. First, a big step that we took in the world of software just about a week and a half ago. Okay, so you’re going to hear more about that, especially tomorrow, when we go over that in detail. So that fragmentation, as I always say, it is the opportunity the fragmentation is the thing that keeps the income property are the big institutional investors out of income property that preserves the opportunity For us, for the regular middle class investor, okay, the fragmentation increases returns, because the institutions aren’t in our game. Now, how many of you have ever thought about or invested in or looked at? So that’s a pretty broad category, right? commercial property? How many of you consider that or done it? Okay. fairly small number. Okay, commercial property, right? If you look at these institutional commercial properties, and usually that’s in the category of anything over about $4 million and above, institutional investors will accept really low, really, frankly, crappy returns on their investments. The reason is they have so much capital deployed, it’s deployed in a more, quote, perfect type of market, deployed in a more perfect market in the sense that all of those investments are underwritten. There’s a word for you they’re underwritten. So when one of these big commercial real estate investment firms looks at a deal maybe it’s a big apartment complex or a big mobile home park, or a big self storage facility or office building or whatever they quote, underwrite the deal. And that means they do some due diligence on it. And they kind of investigate it. And they have this common language, and this common format for discussing the deals and the best investment group for this type of thing of underwriting and having a common language. Who would that be better than commercial real estate, the best group of people out there, it would be Wall Street. They’re the best at having a common language and an understanding of how things work. In fact, companies on Wall Street have the common standard, not that they follow it or anything for accounting. What do they call that they call it gap, generally accepted accounting principles gap. So the more refined and the more perfected and the more standardization there is in any investment, the lower the returns on that investment.
And the more fragmented and the more imperfect. And the more unstandardized The higher the returns. And in the world of residential style real estate investing of single family home type investing, it’s really imperfect. This is a totally fragmented market. And in the US, it’s less imperfect than it is around the world. Okay, I met someone from Brazil this morning that you’ll you’ll be talking to not Fernando, he’s from Brazil too. But another guy on Giovanni’s team. And, you know, you’ll meet him on the bus and when we’re touring properties, and so forth, and he talks about how he helps Brazilian investors buy property in the US. So let’s compare residential real estate now. To resume in the US compared to residential real estate around the world, I have looked at property in so many different markets around the world and say that the US real estate market is a very special real estate market. Because the data that’s available on us real estate is much more comprehensive than it is around the world. You know, this whole concept of an MLS. A multiple listing service is a US concept. Now other countries kind of have this but it’s not to the extent that we have it in the US. And we have things like Zillow and truly and so there’s much more data available in terms of public records and knowing what a property is worth here. So it is more perfect than it is around the world, which is a good thing because you can feel more safe in your investment and also it’s been subsidized by the government since the Great Depression, and so forth. But the fragmentation is just you Huge, this is a big deal. It is a huge opportunity. To some extent it’s kind of, you know, towards that direction on the continuum of the Wild West concept versus Wall Street or even commercial real estate. So here’s an example from Wall Street. How many of you own stocks? Why do you own stocks? Wall Street is the modern version of organized crime. Okay. So if you own a stock and let someone name a company they own stock in and that they know what it’s trading for somewhere around what it’s worth now, apple, so apples like 110, right? Anybody own Apple one, really? So you own Apple stock, right? If it’s trading at 110. I want you to do this experiment. You know, say you’re with Schwab and you trade online with Schwab Cola, the the rapid Schwab and they’re really good Schwab is a great company. By the way. Really helpful, they answer the phone, and they’ll help you. And I just want you to call them up and say, hey, look, I know that my Apple stock is trading at 110. You know, but I’d really like to see if I can get more money. Can you do a little extra marketing and a little extra promotion and you know, put a coat of paint on it and see if you can sell it for 150. You can’t do that right because of the perfection of the market. The market is perfected, it will only trade for what it trades for period. Same with gold or silver or any of the precious metals. It’s a perfected market. Take the metals for example, that becomes more imperfect in the field of numismatics. Okay, rare coins. They’re made out of the same precious metals, but they become more imperfect because of their art value. Right. And so this is true. This is the advantages. It’s one of the huge strengths of income property in the residential market, the one to four unit market as An investment, the fragmentation, it’s huge. Believe me, this is a big deal. Now there’s another aspect of this fragmentation that I want to mention to you. When you’re looking to buy a property that might be a single family home, or a four Plex or a duplex. When you’re looking at this asset, you look at it through the eyes of an investor. And when I got into this business of nationwide real estate investing 11 years ago, the first thing I decided I had to do is standardize the data, data standardization. And so we do that if you look at Jason Hartman comm, you’ll see our properties presented in a standardized format. So here’s a huge advantage for you as residential income property investors, you buy the property like an investor, but if you decide someday to sell the property, who you gonna end up selling it to another investor, you’re going to sell it to a homeowner and owner on.
And the likelihood is you’re going to sell it to an owner occupant who looks at it through rose colored glasses. They look at it from an illogical emotional perspective in a fragmented market. And they always view remember, I was in the traditional real estate business for many years. Okay, that’s, you know how I did most actually most of my career has been in that field. I worked for REMAX for many years. I, you know, worked for century 21 when I started for about nine months and then I worked for REMAX for 12 years. Okay. I can tell you that when people look at a house that they want to buy to live in as an owner occupant, they look at it through the process of elimination, and they look at it through the process of scarcity and comparison to what else you know, they have out there in the marketplace and their expectations. When someone calls on a property and they’re considering living in it. They have one goal when they call Before al gore invented the internet, we have this thing called the newspaper. Okay. And, you know, we’d place ads in the newspaper, and people would call or they’d see a sign in front of the house. And they’d call on the property. And when they call you, they have only one goal. And the goal is to eliminate the property to move on to consider another property. It’s simply a process of deduction, elimination. That’s how a homebuyer things. And so when they do that, they have this, they have this view of the world, and it’s out of scarcity. And what motivation do you think is more powerful for humans? Is it the possibility that I might gain something or the possibility that I might lose something?
Definitely fear of loss far more powerful. In fact, just test yourself, you know, go into a transaction and you know, say Well, you know, if someone takes advantage of me in the deal, and they overcharge me by 100 bucks, you know, how long does it take you to earn 100 bucks, especially if you’re in your own business or you have a little of your own business on the side, right, you can earn 100 bucks pretty quickly. But if you check out the hotel and your hotel bill overcharges, you 100 bucks, you’re gonna be mad, right? And it’s just the way we operate. We operate this way out of scarcity out of fear of loss. Because for eons before this, that’s how our world was our world was not abundant, it was scarce. And, you know, maybe over the last hundred years during the Industrial Revolution, we have the first time in human history that we’ve actually had abundance. And so our minds have not adjusted to the new world at all. We can earn the hundred dollars a lot faster than we can bitch and complain about losing it, right. That’s just the way our minds are. And so we take advantage of this. And even if we don’t sell our property, the whole marketplace is operating like this out there. You know, when you sell a commercial property, it’s sold by a strict measure of cap rate, capitalization rate. In other words, the income the property produces. So, fragmentation, huge strength, huge strength don’t minimize that leverage. The leverage offered on a residential income property is much better than the leverage offered on a commercial property, a commercial income property. So that increases our return on investment. And it’s the most tax favored asset in America. And taxes are the single largest expense in our lives. We live in Florida. So we’re a little lower, though, right? Isn’t that good? So those are some of the strengths of income property. Now, there are many other strengths, okay, any any strengths you’d like to share or discussion on this or questions on this real quickly? Okay, weakness. Why does it suck? Okay? I’d say the hardest part is the management part. Management is so critical when it comes to income, property investing, management, management management. In fact, this is where it all falls apart for most investors on the management. Would you agree with us? How many of you own investment property now? Yeah, most of the room, okay. Is the management The hardest part? Yeah, it can be. I mean, sometimes it’s not if you have a great property manager, or better yet a great tenant, the management gets pretty easy. And you know, most tenants are pretty great. And we’re going to talk about the three different or really four different classes of income property and how those tenants differ this weekend. And so we’ll talk about that as well. So management is difficult. Of course, tenants can abuse your property, and that’s a weakness, rent collection or vacancy, another weakness. Okay, so I think these weaknesses are pretty self explanatory. questions or thoughts on weaknesses? You know, feel free to have interaction here, you know, but Okay, maybe not, you know, usually takes a little more coffee, it’s like after the second break, you know, everybody really wakes up. Okay. So moving on here to opportunities. Well, the opportunities are huge. I mean, this is the most historically proven asset class in the world. So the opportunities well inflation induced debt destruction. You know, I love this thing, right? inflation induced death destruction. It reduces the real value of the mortgage and increases the nominal value of rent and the nominal value of the property. Nominal means a name only. That’s just the name of something. And real estate, as a hedge against inflation, in and of itself, is okay, but it’s not that great. It’s when you leverage that hedge that it becomes great and when you outsource the debt, that that leverage cost you that it becomes great, because then the tenant is paying that debt for you. And hopefully they’re paying you a little extra every month. Okay, so the time we can go back, you know, the the ship has left the dock, so to speak, right. And so we can’t go back, we can only start where we are now. And how many of you have heard me, you know, share that great, great poem, The Reluctant investors lament. I talked about it on the show, you know, written in 1977 when everybody thought real estate was so overpriced in 1977. Okay, we always think that we always think that that’s just the way it is. But regression to replacement cost is different, in my opinion from appreciation. Regression to replacement costs simply means that if you can buy the property for below the cost of construction
And when you buy it below, see, remember, when you look at the performance that we’ll be looking at this weekend, it shows you the cost per square foot. And the cost per square foot. I don’t know exactly, maybe Giovanni’s team can share this with you better than I. But the cost per square foot in in Orlando is probably somewhere in the neighborhood of $80 per square foot, I’m just gonna guess somewhere close to that. So if you can buy the property below the cost of construction, but here’s the thing that Performa doesn’t tell you. It doesn’t include land value. So if you look at the typical hundred thousand dollars, single family home, the land value is probably somewhere in the neighborhood of $20,000. So to find out the real cost per square foot, you have to do a different calculation. Okay, and why don’t we just do this right now while we’re talking about it. Okay, so you got your pen. Do you have your smartphone with your calculator, we’re going to take the typical hundred thousand dollar house We’re going to assume a $20,000 land value. So it’s $100,000. Land is 20,000. This is pretty simple calculation. I know $80,000 is the improvement or the structure sitting on the land, right? Okay, so let’s say that this house is 1400 square feet. What’s 80,000 divided by 1400? Okay, so $57 and 14 cents, right? Is that we said, we’ll just call it 57 $57. If it cost you $80 per square foot to build that house, did we buy below the cost of construction? Yeah, we did. Okay, if a hurricane comes along, or a fire comes along and destroys the structure, depending on the type of insurance you have, the insurance company may pay you the full cost to rebuild it, or they may pay you a depreciated value on it but If it’s $57 per square foot, and it costs $80 per square foot to build it, that delta between those two is built in equity. Now, I understand completely that you may not be able to turn around and sell the property for more than that. But that equity is kind of hanging there. And this is a great safeguard. It shows you that in addition to the potential for future appreciation, before you get to appreciation, the first thing that happens is regression to replacement cost. And when Carrie It was kind of funny how you introduce me because you said, you said, Jason looks at every house as a commodity, right? See, I’m really at heart A commodities investor, we invest in the commodities, but when they’re labeled as real estate, when they’re labeled as income property. It brings special characteristics to those commodities that we don’t get anywhere else. You can go on commodities exchange and buy lumber, copper wire, petroleum products, glass, steel all the ingredients of a house and get three decade long, artificially low fixed rate financing. And you can’t take those commodities once you encumber them without good debt. Okay debt being my favorite four letter word. Okay? Once you encumber them with had debt, you can’t turn around and outsource that debt to a tenant and say hey, you pay my debt for me. special characteristics of income property for sure. So regression to replacement costs happens before appreciation. When you see the market turn and prices start to come back. The first thing you get back is the regression to the replacement cost. In other words, this $57 per square foot house going to $80 per square foot, the replacement cost and after that you get appreciation Just think about that concept. Okay, and ask me about it this weekend. It’s it’s pretty awesome. And then you have appreciation. Okay, so that’s the last one. Okay, what are the threats? overall economic collapse, certainly a threat. And you know, that could change everything.
A few years ago, well, now several years ago, time flies when you’re having fun. We had the worst economic collapse in seven decades. The Great Recession and that’s a wild card. Okay. But I think for many reasons income property is probably your best hedge here. Most people think it would be gold or silver. As you know, I’m definitely not a gold or silver bug. I would far rather own bullets and food and water than gold and silver. Okay, those are far more practical and you can barter with them. And you know, cigarettes and vodka not bad either population decline this This one is tough. And you know, I think everything I’ll share with you this weekend, it’s pretty reliable, you know, it’s pretty darn reliable. But if the population declines, all bets are off. all bets are off. I can’t do anything about that. And I have no solution. And this is why when you look at areas like Detroit, the poster child for big government disaster, when you look at areas like Detroit, you just can’t fix that. Because when the population declines, it’s just over. Okay. And when you look at this on a national level, and you look at countries like Japan, that’s their problem is their population is in decline. You look at Western Europe. That’s a huge problem. You look at Russia. Putin is paying people to have kids. Okay, I think it’s $7,000 get paid to have kids. You look at places like what was my other example? It was a good one China. Oh, yeah. China Thank you. Their their one child policy, absolute disaster and now they’ve reversed it thankfully. Okay. So population decline over there’s no solution for that. Thankfully though in the US we’ve had we have pretty fast population growth, okay. And in the markets when we’re in and the markets we recommend, I mean they’re attractive places to live right. So, so this probably won’t be a problem. Okay. And then other threats any other threats? No. Okay, so let’s talk about how to mitigate these. Number one, spread your risk along multiple properties and multiple markets. Okay, obviously diversify. That’s one of the 10 commandments, thou shalt diversify. You want to have all your eggs in that income property basket, maybe not all of them, you’re probably not gonna listen to me anyway. But I think it’s the best thing going. It’s the best best thing since sliced bread. Okay, so diversification and the law of large numbers, the law of large numbers. So increasing the total number of units or doors in your portfolio creates economies of scale. And it actually reduces your risk quite a bit. So if you have, you know, if you have 25 homes or doors in your portfolio, 25 units in your portfolio, and four of them are vacant, and 21 of them are occupied and paying, you know, your risk is a lot lower than if you have two units, right? It’s the law of large numbers.
Announcer 49:38
I’ve never really thought of Jason as subversive, but I just found out that’s what Wall Street considers him to be. Really now How is that possible at all? Simple. Wall Street believes that real estate investors are dangerous to their schemes? Because the dirty truth about income property is that it actually works in real life. I know I mean, how many Do you know not including insiders who created wealth with stocks, bonds and mutual funds? those options are for people who only want to pretend they’re getting ahead. Stocks and other non direct traded assets are a losing game for most people. The typical scenario is you make a little you lose a little and spin your wheels for decades.
Announcer 50:21
That’s because the corporate crooks running the stock and bond investing game will always see to it that they win. This means unless you’re one of them, you will not win. And unluckily for wall street. Jason has a unique ability to make the everyday person understand investing the way it should be. He shows them a world where anything less than a 26% annual return is disappointing. Yep. And that’s why Jason offers a one book set on creating wealth that comes with 20 digital download audios. He shows us how we can be excited about these scary times and exploit the incredible opportunities this present economy has have afforded us. We can pick local markets untouched by the economic downturn exploited packaged commodities investing, and achieve exceptional returns safely and securely. I like how he teaches you how to protect the equity in your home before it disappears and how to outsource your debt obligations to the government. And this set of advanced strategies for wealth creation is being offered for only $197. To get your creating wealth encyclopedia book one complete with over 20 hours of audio, go to Jason hartman.com forward slash store. If you want to be able to sit back and collect checks every month, just like a banker. Jason’s creating wealth encyclopedia series is for you.
This show is produced by the Hartman media company All rights reserved for distribution or publication rights and media interviews, please visit www dot Hartman media.com or email media at Hartman media.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax legal real estate or business professional for individualized advice. opinions of guests are their own. And the host is acting on behalf of Platinum properties, investor network, Inc. exclusively.
